- High-beta stocks have increased far more than the S&P 500 in 2023, putting them in a complicated position if a reversal comes.
- Tesla is nearly twice as volatile as the S&P 500, but another well-known tech company has even a higher beta.
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Which U.S. stocks currently have the highest beta relative to the S&P 500 index?
If the word "stock beta" is unfamiliar to you, don't panic - it's a lot simpler than it sounds.
Beta is a volatility metric that helps investors determine the relative risk of a stock.
When determining beta, the stock's movement is compared to the market's overall movement, which in most cases means the S&P 500. A beta of 1.0 suggests that a stock's volatility is comparable to that of the S&P 500. A beta value greater than 1.0 indicates that the stock's price movement has historically been more volatile than the market as a whole. A stock with a beta of 1.50, for instance, is 50% more volatile than the market.
When the market trend is firmly established, knowing a stock's beta is a valuable tool for traders. In bullish market phases, stocks with a beta greater than 1 tend to outperform the market, whereas in bearish market phases, these stocks tend to decline more than the market on average.
The five highest beta equities with a market capitalization higher than $50 billion are listed below:
5) Lam Research Corp. LRCX
- Year-to-date price change: 23.3%
- Overperformance vs S&P 500: 18%
- 2-year weekly beta vs S&P 500: 1.81
4) Tesla, Inc. TSLA
- Year-to-date price change: 70%
- Overperformance vs S&P 500: 63%
- 2-year weekly beta vs S&P 500: 1.95
3) NVIDIA Corp. NVDA
- Year-to-date price change: 92%
- Overperformance vs S&P 500: 85%
- 2-year weekly beta vs S&P 500: 2.01
2) MercadoLibre, Inc. MELI
- Year-to-date price change: 51%
- Overperformance vs S&P 500: 42%
- 2-year weekly beta vs S&P 500: 2.13
1) Shopify, Inc. SHOP
- Year-to-date price change: 27%
- Overperformance vs S&P 500: 20%
- 2-year weekly beta vs S&P 500: 2.66
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