Beta vs. Volatility

This video shows the difference between a stock's beta and its volatility. Volatility is a measure of total risk, which includes systematic risk (market risk) and unsystematic risk (firm-specific risk). This means that you might occasionally encounter the following situation: Firm A has a lower beta than Firm B, but Firm A has a higher volatility than Firm B. This simply means that Firm A has lower market risk, yet higher total risk, which implies that Firm A's firm-specific risk must be higher than the firm-specific risk of Firm B.

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