If you own shares in John Wiley & Sons, Inc. (NYSE:JW.A) then it’s worth thinking about how it contributes to the volatility of your portfolio, overall. In finance, Beta is a measure of volatility. Volatility is considered to be a measure of risk in modern finance theory. Investors may think of volatility as falling into two main categories. First, we have company specific volatility, which is the price gyrations of an individual stock. Holding at least 8 stocks can reduce this kind of risk across a portfolio. The second sort is caused by the natural volatility of markets, overall. For example, certain macroeconomic events will impact (virtually) all stocks on the market.

Some stocks mimic the volatility of the market quite closely, while others demonstrate muted, exagerrated or uncorrelated price movements. Some investors use beta as a measure of how much a certain stock is impacted by market risk (volatility). While we should keep in mind that Warren Buffett has cautioned that ‘Volatility is far from synonymous with risk’, beta is still a useful factor to consider. To make good use of it you must first know that the beta of the overall market is one. A stock with a beta greater than one is more sensitive to broader market movements than a stock with a beta of less than one.

See our latest analysis for John Wiley & Sons What JW.A’s beta value tells investors

With a beta of 1.08, (which is quite close to 1) the share price of John Wiley & Sons has historically been about as voltile as the broader market. While history does not always repeat, this may indicate that the stock price will continue to be exposed to market risk, albeit not overly so. Beta is worth considering, but it’s also important to consider whether John Wiley & Sons is growing earnings and revenue. You can take a look for yourself, below.

How does JW.A’s size impact its beta?

John Wiley & Sons is a reasonably big company, with a market capitalisation of US$2.7b. Most companies this size are actively traded with decent volumes of shares changing hands each day. We shouldn’t be surprised to see a large company like this with a beta value quite close to the market average. Large companies often move roughly in line with the market. In part, that’s because there are fewer individual events that are signficant enough to markedly change the value of the stock (compared to small companies, at least). What this means for you:

It is probable that there is a link between the share price of John Wiley & Sons and the broader market, since it has a beta value quite close to one. However, long term investors are generally well served by looking past market volatility and focussing on the underlying development of the business. If that’s your game, metrics such as revenue, earnings and cash flow will be more useful. In order to fully understand whether JW.A is a good investment for you, we also need to consider important company-specific fundamentals such as John Wiley & Sons’s financial health and performance track record. I highly recommend you dive deeper by considering the following: Future Outlook : What are well-informed industry analysts predicting for JW.A’s future growth? Take a look at ourfree research report of analyst consensusfor JW.A’s outlook. Past Track Record : Has JW.A been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look atthe free visual representations of JW.A’s historicalsfor more clarity. Other Interesting Stocks : It’s worth checking to see how JW.A measures up against other companies on valuation. You could start with thisfree list of prospective options.

If you spot an error that warrants correction, please contact the editor ateditorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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