A stock’s sensitivity to movements in the overall market is commonly measured by beta.
In finance, beta compares an asset’s historical movements with those of a chosen benchmark, often a broad stock-market index. A beta of 1 suggests that the asset has tended to move in line with the benchmark, while a beta above 1 indicates greater historical sensitivity and a beta below 1 indicates less sensitivity.
Beta is a statistical estimate, not a promise about future performance. Its value depends on the period measured, the frequency of observations, and the benchmark selected. A stock can have a different beta against a global index than against a country-specific index.
Beta should not be confused with alpha. Alpha is commonly used to describe performance relative to a benchmark after considering expected or systematic exposure. Beta also does not measure every kind of risk: company-specific events, liquidity problems, and sudden structural changes may not be captured well by a historical estimate.