Beta and CAPM

Beta is a measure of the volatility and overall risk of a stock or portfolio of securities. A beta of 1 suggests that the stock will move in line with the market, greater than 1 suggests a higher degree of volatility and risk, less than 1 a lower degree of volatility and risk.

Beta is used in the capital asset pricing model (CAPM), a model refecting the relationship between risk and return in securities.