Beta Definition

Learn the definition of beta and other ETF terminology from the etf.com glossary.

ETF
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Reviewed by: etf.com Staff
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Edited by: etf.com Staff

Learn more about Beta

Beta is a measure of an ETF's volatility relative to the broader market. It represents the sensitivity of an ETF's price movements compared to changes in the overall market index, such as the S&P 500. A beta of 1 indicates that the ETF moves in line with the market, while a beta greater than 1 suggests the ETF is more volatile than the market, and a beta less than 1 implies the ETF is less volatile than the market. Investors often use beta to assess the risk associated with a particular ETF.

Related Terms

Alpha, Smart Beta ETF, Index

ETF Glossary is etf.com’s collection of key terms and definitions related to exchange-traded funds. ETFs are investment funds that are traded on stock exchanges, and they can encompass a wide range of asset classes, including stocks, bonds, commodities and more. Given the diverse range of ETFs and the complexity of financial markets, having a clear understanding of ETF-related terminology is instrumental for investors looking to make informed decisions, manage risks effectively and navigate the evolving landscape of ETF investments.