Ultimately, beta is an interesting metric, but there's plenty more to learn. Alternatively, it could have operating leverage in its business model. This could indicate that it is a high growth company, or is heavily influenced by sentiment because it is speculative. Take a look at how Blue Prism Group fares in that regard, below.īeta only tells us that the Blue Prism Group share price is sensitive to broader market movements. Share price volatility is well worth considering, but most long term investors consider the history of revenue and earnings growth to be more important. If the past is any guide, we would expect that Blue Prism Group shares will rise quicker than the markets in times of optimism, but fall faster in times of pessimism. Given that it has a beta of 1.7, we can surmise that the Blue Prism Group share price has been fairly sensitive to market volatility (over the last 5 years). View our latest analysis for Blue Prism Group What does PRSM's beta value mean to investors? In comparison a stock with a beta of over one tends to be move in a similar direction to the market in the long term, but with greater changes in price. A stock with a beta below one is either less volatile than the market, or more volatile but not corellated with the overall market. To make good use of it you must first know that the beta of the overall market is one. While we should keep in mind that Warren Buffett has cautioned that 'Volatility is far from synonymous with risk', beta is still a useful factor to consider. Some investors use beta as a measure of how much a certain stock is impacted by market risk (volatility). Some stocks are more sensitive to general market forces than others. For example, certain macroeconomic events will impact (virtually) all stocks on the market. The second sort is caused by the natural volatility of markets, overall. Holding at least 8 stocks can reduce this kind of risk across a portfolio. First, we have company specific volatility, which is the price gyrations of an individual stock. Investors may think of volatility as falling into two main categories. Volatility is considered to be a measure of risk in modern finance theory. Anyone researching Blue Prism Group plc ( LON:PRSM) might want to consider the historical volatility of the share price.
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