What is a high beta stock?

Conversely, a high beta stock may be from a company whose stock price is plummeting due to some current events that might have a longstanding negative impact, such as downsizing or bankruptcy. High beta stocks may indicate a history of frequent movement in opposition to the overall stock market.

Should you buy a stock with a high beta?

Stocks with high beta values, on the other hand, provide greater opportunities for high rewards, at the risk of higher losses, as compared to the market, and are an excellent option for investment in times of market recovery and growth.

Are high-beta stocks a good investment?

High-beta stocks can generate high returns but also have significant downside risks when markets fall. Understanding beta and its uses can be important for growth investors seeking to identify the best-performing stocks. High beta stocks are positively correlated with returns of the S&P 500, but at an amplified magnitude.