Usually utilized in the Capital Asset Pricing Model, Beta (β).
Beta (β) measures a security or portfolio's volatility, or systematic risk, in relation to the market as a whole. Generally speaking, stocks with betas greater than 1.0 are thought to be more volatile than the S&P 500.
The capital asset pricing model (CAPM), which analyzes the connection between systematic risk and projected asset returns, employes beta (usually stocks). The CAPM approach is frequently used to value hazardous securities and to predict projected returns of assets while taking into account both the risk of such assets and the cost of capital.
The amount of risk that a stock will bring to a (supposedly) diversified portfolio can only be roughly predicted using beta data about a specific stock.
The stock must be tied to the benchmark used in the computation for the beta to have any significance.
Learn more about beta of a portfolio:
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