What Does Its Beta Value Mean For Your Portfolio?


<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "If you are interested in Hawaiian Holdings, Inc. (NASDAQ: HA), you may want to examine its beta (measure of stock price volatility) to understand the impact the stock might have on your portfolio. Modern financial theory views volatility as a measure of risk, and there are two main types of price volatility. The first type is company-specific volatility. Investors use uncorrelated equity diversification to reduce this type of price volatility across the entire portfolio. The second type is the greater volatility of the market, which can not be diversified because it stems from macroeconomic factors that directly affect all market shares. "Data-reactid =" 27 "> If you're interested in Hawaiian Holdings, Inc. (NASDAQ: HA), you might want to look at its beta (measure of stock price volatility) to understand the impact that action may have on your portfolio Modern financial theory views volatility as a measure of risk Two main types of price volatility: the first type is company-specific volatility, with investors seeking diversification between uncorrelated equities to reduce this type of price volatility in the portfolio, the second type, the greater volatility of the market, which you can not diversify, macroeconomic factors that directly affect all the shares in the market.

Some stocks closely mimic market volatility, while others have moderate, exaggerated or uncorrelated price movements. Beta is a widely used measure to measure the exposure of a stock market risk (volatility). Before proceeding, it should be noted that Warren Buffett pointed out in his 2014 letter to shareholders that "volatility is far from being risky". That said, the beta can still be quite useful. The first thing to understand about the beta is that the beta of the whole market is one. A stock whose beta is less than one is less volatile than the market, is more volatile but not correlated to the market in general. In comparison, a stock with a beta greater than 1 tends to move in the same direction as the market in the long run, but with larger price changes.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " Discover our latest analysis for Hawaiian Holdings "data-reactid =" 29 "> Discover our latest analysis for Hawaiian Holdings

What does the beta value of HA mean for investors?

Zooming on Hawaiian Holdings, we find that it has a beta of 1.75 over five years. As it is above 1, its stock price has always been influenced by the broader volatility of the stock market. If this beta is true in the future, Hawaiian Holdings' shares will likely increase more than the market as the market rises, but decline more rapidly as the market declines. Many would argue that beta is useful for sizing positions, but that fundamental measures such as income and profits are more important in general. You can see the revenues and revenues of Hawaiian Holdings in the image below.

NasdaqGS: Income Statement HA, October 9, 2019

What is the impact of HA size on its beta?

Hawaiian Holdings is a small stock market capitalization with a market capitalization of 1.2 billion US dollars. Most companies of this size are actively traded. It is quite common to see a small cap stock with a beta higher than one. This is partly explained by the fact that relatively few investors can affect the price of a small business compared to a large one.

What does this mean for you?

Since Hawaiian Holdings tends to go up when the market is going up and down when it goes down, potential investors may wish to think about the market as a whole, when considering the title. The purpose of this article is to inform investors about beta values, but important corporate fundamentals such as the financial health and performance of Hawaiian Holdings should also be considered. I urge you to continue your research by examining the following:

  1. Future prospects: What do well-informed industry analysts predict for the future growth of HA? Check out our free research report on analyst consensus on HA's outlook.
  2. antecedents: Has HA always performed well regardless of the ups and downs of the market? Go into more detail in the analysis of past performances and take a look at the free visual representations of HA histories for clarity.
  3. Other interesting actions: It's worth checking to see how HA compares to other companies in terms of valuation. You can start with this free list of potential options.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Our goal is to provide you with a long-term research analysis based on fundamental data. Note that our analysis may not take into account the latest price sensitive business announcements or qualitative information.

If you notice an error that can be corrected, please contact the publisher at editorial-team@simplywallst.com. This article from Simply Wall St is of a general nature. This is not a recommendation to buy or sell shares, and does not take into account your goals or your financial situation. Simply Wall St has no position on the actions mentioned. Thanks for the reading."data-reactid =" 52 ">Our goal is to provide you with a long-term research analysis based on fundamental data. Note that our analysis may not take into account the latest price sensitive business announcements or qualitative information.

If you notice an error that needs to be corrected, please contact the publisher at editorial-team@simplywallst.com. This article from Simply Wall St is of a general nature. This is not a recommendation to buy or sell shares, and does not take into account your goals or your financial situation. Simply Wall St has no position on the actions mentioned. Thanks for the reading.

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