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Search for an ETF or holding
Updated 2mo ago.
Updated 2mo ago.
Beta measures how sensitive an investment is to movements in the overall market. A beta of 1.0 means the investment moves in perfect sync with its benchmark index. A beta above 1.0 indicates the investment amplifies market movements (more volatile), and below 1.0 that it dampens them.
QQQ (or XQQ.TO, the Canadian NASDAQ-100 ETF) has a beta of roughly 1.2 relative to the S&P 500, because it is concentrated in technology which is more volatile. ZAG.TO (bonds) has a beta of about 0.1 since bonds often rise when stocks fall. VEQT.TO has a beta close to 1.0 because it is highly diversified globally.
Beta helps you understand how an ETF will react during a market correction. If you know your portfolio has a beta of 1.3 and the market corrects by 20%, you can anticipate a drop of roughly 26%. This is useful for planning, but beware: beta is based on the past and can change, especially during crises when correlations increase.