Companies directly correlated with the market, these generally provide low-risk.
Inputs to our calculation
Our Safety Score is a reduction of Beta. Beta is a measure of volatility, specifically how much an individual company moves compared to the market as a whole.
If you're invested in the market at all, you open yourself up to some level of risk. Companies with beta = 1 will be most directly correlated with the market, and will move in lock-step regarding overall return. A company with beta = 1 will receive our highest safety score – you're as safe as the market and can expect market-level returns.
Companies with Beta > 1 will experience greater fluctuations that the entire market (providing above-market gains, or worse-than-market losses), and vice versa with Beta < 1.
When Beta < 0, the company will move opposite the market – we consider this a bit unsafe, and hence award a low Safety score.