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If you are interested in Atkore International Inc. (NYSE: ATKR), you may want to consider its beta (measure of stock price volatility) to understand the impact the stock may have on your portfolio. Modern financial theory views volatility as a measure of risk, and there are two main types of price volatility. First, we have company-specific volatility, which is the price movement of a particular security. Holding at least 8 stocks can reduce this type of risk in a portfolio. The other type, which can not be diversified, is the volatility of the entire market. All stocks in the market are exposed to this volatility, due to the fact that stock prices are correlated in an efficient market.
Some stocks closely mimic market volatility, while others have moderate, exaggerated or uncorrelated price movements. Beta is a widely used measure of a stock's exposure to 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, beta can still be quite useful. The first thing to understand about beta is that market beta is one of them. Any stock with a beta higher than one is considered more volatile than the market, while those with a beta below one are either less volatile or weakly correlated with the market.
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What does the ATKR beta value mean for investors?
Over the past five years, the Atkore International group has a beta version of 1.98. The fact that it is well above 1 indicates that stock price fluctuations have shown a sensitivity to overall market volatility. Based on the past, we can expect Atkore International's shares to grow faster than markets in times of optimism, but to decline more quickly in times of pessimism. 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 business figure and results of the Atkore International group in the image below.
What is the impact of ATKR size on its beta version?
The Atkore International Group is a small company, but not tiny and little known. It has a market capitalization of 1.1 billion US dollars, which means that it would be in the sights of institutional investors. It is quite common to see a small cap stock with a beta higher than one. This is partly because relatively few investors can influence the price of a small business compared to a large one.
What does this mean for you?
Since the Atkore International group tends to go up when the market is rising and falling when it falls, potential investors may want to think about the market as a whole, when taking into account the security. In order to fully understand if ATKR is a good investment for you, we also need to consider important fundamental principles of the company, such as the financial health and performance of Atkore International Group. I urge you to continue your research by examining the following:
- Future prospects: What do well-informed industry badysts predict for ATKR's future growth? Check out our free research report on badyst consensus on ATKR's outlook.
- antecedents: Has ATKR always been successful regardless of the ups and downs of the market? Go into more detail in past performance reviews and take a look at the free visual representations of ATKR's history for clarity.
- Other interesting actions: It's worth checking how ATKR compares to other companies in terms of valuation. You can start with this free list of potential options.
Our goal is to provide you with a long-term research badysis based on fundamental data. Note that our badysis 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 [email protected]. 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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