Beta investing and the effect it can have on investment decisions
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Stocks are correlated to the market in according to how well they track the broad market index. High beta stocks are considered to be more responsive to the underlying movements in the market. If you are risk adverse, investing in low beta stocks are the preferred option. You are less likely to experience an adverse impact on your portfolio in response to the volatility in the market. Mature stocks such as utilities tend to be less affected by the day to day movements in the markets.
