Also known as 'beta coefficient', beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Beta is used in the capital asset pricing model (CAPM), a model that calculates the expected return of an asset based on its beta and expected market returns.

Beta is calculated through regression analysis. If beta is 1, it is expected to move with the market, less than 1 is less volatile and greater than 1 is more volatile. If a beta reads .8, it is 20% less volatile than the market.