This may explain the excess volatility implied by this beta value. It takes less money to influence the share price of a very small company. It has a market capitalisation of US$137m, which means it is probably under the radar of most investors. NYSE:CHK Income Statement May 22nd 2020 How does CHK's size impact its beta?Ĭhesapeake Energy is a rather small company. A stock with a beta greater than one is more sensitive to broader market movements than a stock with a beta of less than one.Ĭheck out our latest analysis for Chesapeake Energy To use beta as an investor, you must first understand that the overall market has a beta of one. So, while useful, beta is not the only metric to consider. However, Warren Buffett said 'volatility is far from synonymous with risk' in his 2014 letter to investors. Beta can be a useful tool to understand how much a stock is influenced by market risk (volatility).

Others tend towards stronger, gentler or unrelated price movements. Some stocks see their prices move in concert with the market. The second type is the broader market volatility, which you cannot diversify away, since it arises from macroeconomic factors which directly affects all the stocks on the market. 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. In finance, Beta is a measure of volatility.

If you own shares in Chesapeake Energy Corporation ( NYSE:CHK) then it's worth thinking about how it contributes to the volatility of your portfolio, overall.

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