A beta greater than 1 generally means that the asset both is volatile and tends to move up and down with the market. An example is a stock in a big technology company.

A beta above 1 means the stock is more volatile, while a beta below 1 means it is less volatile. Calculating beta involves comparing the stock’s past price movements to market indices.

Multiply those proportions by the beta of each stock. For example, if Apple makes up 0.30 of the portfolio and has a beta of 1.36, then its weighted beta in the portfolio would be 1.36 x 0.30 = 0.408.

Beta can help you answer questions like, “If the S&P 500 declined by 10%, what would it mean for my portfolio?” This is in contrast to unsystematic risk, which is the risk of investing in a ...