The beta captures the risk profile of an investment in relation to the market. It reflects how closely an investment’s returns move with that of the market returns. The equity beta of a stock reflects how closely that equity stock’s returns move with that of the market returns. An equity beta of one indicates that the stock return will move exactly in line with the market. For example, if that market provides a 10% return, this stock will also have a 10% return. An equity beta of 1.5 indicates that if the market moves up by 10%, this stock will move up by 15% (10% x 1.5). A negative beta indicates that the stock moves in the opposite direction of the market. If the market goes up, a negative beta stock will move down. For example, equity beta of -0.5 indicates that if the market moves up by 10%, this stock will move down by -5% (10% x -0.5).