If The S&P 500 Falls, These 5 High-Beta US Stocks Will Likely Underperform

by Piero Cingari Benzinga Staff Writer

Zinger Key Points

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