Target's Beta refers to the beta value of the company Target Corporation (TGT). As of December 11, 2024, Target's Beta is 1.09.
Understanding Beta
Beta is a fundamental concept in finance that measures the sensitivity of an asset's expected excess returns to the expected excess returns of the overall market. In simpler terms, it indicates how much a stock's price tends to move in relation to movements in the broader market.
- Market Sensitivity: Beta quantifies a stock's volatility compared to the market. A beta of 1.0 means the stock is expected to move in line with the market.
- Systematic Risk: Beta is a measure of systematic risk, which is the non-diversifiable risk inherent in the overall market.
Interpreting Target's Beta (1.09)
A beta of 1.09 for Target means that the stock is theoretically slightly more volatile than the overall market.
- Market Movement: If the broader market (often represented by an index like the S&P 500) goes up by 1%, Target's stock price is expected to increase by approximately 1.09%.
- Downward Movement: Conversely, if the market declines by 1%, Target's stock is expected to decrease by about 1.09%.
This indicates that Target's stock tends to amplify market movements, both upwards and downwards, though only slightly.
Significance for Investors
Understanding a company's beta is crucial for investors as it provides insights into the stock's risk profile and its potential role within a diversified investment portfolio.
Here's a general interpretation of different beta values:
| Beta Value | Interpretation | Implications |
|---|---|---|
| Beta < 1 | Less volatile than the market (e.g., utility stocks, consumer staples) | Lower risk, tends to perform better in down markets |
| Beta = 1 | Moves in tandem with the market (e.g., broad market index funds) | Mirrors market performance, average risk |
| Beta > 1 | More volatile than the market (e.g., growth stocks, technology) | Higher risk, tends to amplify market gains/losses |
| Beta < 0 | Moves inversely to the market (rare, e.g., some gold stocks or inverse ETFs) | Can act as a hedge against market downturns |
For Target, a beta of 1.09 suggests it is a relatively stable investment that generally follows market trends but with a slight tendency for larger swings. Investors might consider Target's stock to be a growth-oriented retail play, but not as highly volatile as some pure-play growth or technology companies.
