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What is upside beta?

Upside beta

Beta measures the volatility of a stock in relation to the market as a whole. Upside beta analyses the stock's behaviour during an upward trend. In other words, it shows you how the stock grows or falls when the market grows.

Where have you heard about upside beta?

Some investment websites list the beta of stocks to help you work out how risky they might be based on their past volatility levels. Upside beta is a way to measure upside risk in a beta calculation.

What you need to know about upside beta.

Upside beta measures upside risk to changes in the market. You can try to construct your portfolio by maximising upside beta, which can help you profit during an upswing. For instance, if you expect the market to go up next week, you need to pick the stock that will outperform the market, so choose the one with the highest upside beta.

Upside beta is calculated on days when the benchmark's return is positive, while downside beta is calculated when it’s negative.

Find out more about upside beta.

Read our definitions of beta and downside beta to discover more about predicting volatility.

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