Beta
Filter
Beta Filter (Beta)
Find high beta stocks, or low beta stocks, in real time, with Trade Ideas Streaming Alerts (Scanner) and Top Lists (Screeners). Beta measures a stock's volatility relative to the overall market, usually the S&P 500. Above 1 is more volatile than the market; below 1 is less.
Watch the market turn, stock by stock.
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Seeing a high-beta stock move with the market as it happens helps active traders. The Beta filter value changes once a day, so Streaming Alerts apply it the moment each alert fires: you see only the stocks that pass it, while they are moving.
How Trade Ideas finds it: set the minimum value to 1 and the maximum value to 1.25 to see only stocks in which the price movement has close to the same volatility as the S&P 500 Index. See Trade Ideas plans and pricing to run it live.
How the Beta filter works
Key point
Beta is a measure of the volatility of a given stock relative to the overall market, usually the S&P 500. Beta describes the sensitivity of an instrument to broad market movements. A beta above 1 is more volatile than the overall market, while a beta below 1 is less volatile. Securities with betas of zero generally move independently of the overall market. And finally, stocks with negative betas tend to move in the opposite direction relative to the broader market. When the S&P tumbles, stocks with negative betas will move higher, and vice versa.
- A beta of 2.50 represents stock price movement that is 150% more volatile than the S&P 500 Index.
- A beta of 1.00 represents stock price movement that has the same volatility as the S&P 500 Index.
- A beta of 0.50 represents stock price movement that is half as volatile as the S&P 500 Index.
- A beta of -0.50 represents stock price movement that is half as volatile of the S&P 500 Index, but the stock price tends to move in the opposite direction.
Beta filter settings
Configuring the "Beta" filter is simple and can be done within the Window Specific Filters Tab of the Configuration Window in your Alert or Top List (Screener) window.
Here's how to set up the filter in your configuration window:
- Set the minimum value to 1 and the maximum value to 1.25 to see only stocks in which the price movement has close to the same volatility as the S&P 500 Index.
Using the Beta Filter
The "Beta" filter can be used in various trading strategies, including:
- High-Beta Stocks for Momentum Trading: Investors seek out stocks with high betas, indicating greater volatility, to capitalize on short-term price movements. High-beta stocks tend to exhibit stronger momentum, rising more sharply during market upswings and falling more steeply during downturns. Traders may take long positions in high-beta stocks during bullish market conditions, aiming to profit from their amplified price movements.
- Low-Beta Stocks for Defensive Trading: Conversely, traders may focus on stocks with low betas, indicating lower volatility, as defensive plays during periods of market uncertainty or downturns. Low-beta stocks tend to offer more stability and may outperform high-beta stocks during market declines. Traders may take long positions in low-beta stocks as a hedge against market volatility or as a strategy to preserve capital during turbulent market conditions.
- Beta-Adjusted Position Sizing: Traders adjust their position sizes based on the beta of individual stocks to manage risk exposure and portfolio volatility. Higher-beta stocks receive smaller position sizes to mitigate the impact of their greater volatility on overall portfolio risk. Conversely, lower-beta stocks may receive larger position sizes to achieve a balanced risk-return profile.
Filters to combine with Beta
Categories
FAQ
Which stocks have the highest beta?
Add the Beta filter (Beta) to a Trade Ideas Streaming Alerts or Top List (Screener) window. Set the minimum value to 1 and the maximum value to 1.25 to see only stocks in which the price movement has close to the same volatility as the S&P 500 Index.
What is the Beta filter?
Beta measures a stock's volatility relative to the overall market, usually the S&P 500. Above 1 is more volatile than the market; below 1 is less.
What does a high beta mean?
Use the Beta filter (Beta) in Trade Ideas Streaming Alerts and Top Lists to find high beta stocks, or low beta stocks. Beta measures a stock's volatility relative to the overall market, usually the S&P 500.