Concept · Asset allocation
What is beta?
Direct answer How much an asset moves with the stock market, per unit of the market's move, measured on past returns. A beta of 0.2 means a 10% rise or fall in stocks came with a 2% move in the asset, on average. On this site a house carries a beta of about 0.2, so a fifth of its value counts as stock exposure.
Beta is a slope: regress the asset’s returns on the market’s and read the coefficient. It says nothing about the asset’s own swings beyond what the market explains, which is why a house can have a beta near 0.2 and a true volatility near 17% at the same time; the rest of the house’s risk is its own, and on the Asset allocation page that residual sizes the reserve, not the mix.
Measured on annual returns, a Los Angeles house had a beta of 0.23 to the S&P 500 over 1988 to 2025 and 0.42 over 2006 to 2025, a window dominated by 2008; a national house, 0.10 and 0.21. The site uses 0.2 as the working number and lets the reader pick from the four.