How To Use Beta in Investing

Beta is one way to measure a stock's historical volatility. Here's how it works.

The word "beta" written out on wooden blocks
(Image credit: Getty Images)

Investing can be a lot like jumping on a trampoline. One minute you're up; the next you're down. The whole experience can be downright exhausting. Wouldn't it be great if you could anticipate just how much bouncing a stock would do before you purchased it?

It turns out you can – at least theoretically – thanks to a statistical measurement known as beta.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

To continue reading this article
please register for free

This is different from signing in to your print subscription

Why am I seeing this? Find out more here

Coryanne Hicks
Contributing Writer,

Coryanne Hicks is an investing and personal finance journalist specializing in women and millennial investors. Previously, she was a fully licensed financial professional at Fidelity Investments where she helped clients make more informed financial decisions every day. She has ghostwritten financial guidebooks for industry professionals and even a personal memoir. She is passionate about improving financial literacy and believes a little education can go a long way. You can connect with her on Twitter, Instagram or her website,