Beta is one way to measure the volatility of a stock or ETF. It is a calculation that compares how closely the market price of the stock or ETF follows the market. In our case, we always calculate how closely the market price of a given ETF follows the market price of SPY, an ETF that tracks the S&P 500. A beta of less than 1 means that the ETF's market price has been less volatile than the market (SPY). A beta of greater than 1 indicates that the ETF's market price has been more volatile than the market.
Beta is one statistical measure of a stock or ETF's volatility. Another common statistical measure is standard deviation. Standard deviation is slightly different than beta, because standard deviation looks at the volatility of a stock or ETF's return, whereas beta looks at the volatility of a stock's or ETF's market price.
Our calculations are done in the following manner:
Here are the betas of some ETFs that we have chosen just to illustrate what different betas look like.
USMV's beta compared to SPY is 0.09
SPLV's beta compared to SPY is 0.01
SPHD's beta compared to SPY is 0.61
IJR's beta compared to SPY is 1.91
All data is a live query from our database. The wording was last updated: 04/10/2020.
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