I recently asked Should retail investors learn and use the capital asset pricing model (CAPM)?, where a good answer mentioned that "beta" is a rough measure of risk, measured based on the price sensitivity of a stock relative to the underlying market.

I am not worried about price volatility. I am only concerned about bankruptcies and permanent impairments of value. Is there research that indicates a correlation between beta and bankruptcy? (I am not knowledgeable enough to read research papers in finance, hence my question.) Theoretically and empirically, if a stock has a high beta, does it mean that there is a higher chance of bankruptcy? If not, why should I care about betas?


Boeing has a current beta of 2.16. Do you think that it has a high probability of going bankrupt?

MET, COF, C, MS have betas over 1.50. Going bankrupt anytime soon?

How about RTX, CVX, LOW, AXP, BAC, CVX, EMR, NVDA, GS, WFC, NKE with betas above 1.25.?

Beta measures the expected move in a stock relative to how much the market moves. It reflects the volatility of the stock. You can make a case that very high beta suggests higher price risk for a stock but it offers nothing regarding about the actual fundamentals of a company.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.