What is true about a security with a high beta?

A security with a high beta is characterized by greater volatility compared to the overall market. Specifically, a beta greater than one indicates that the security tends to move in the same direction as the market but with more intensity. When the market is gaining, a high-beta security is expected to rise more sharply than the overall market, leading to outperformance. Conversely, when the market is experiencing losses, this security is also likely to fall more deeply than the market, which results in underperformance.

This relationship highlights the risk-reward dynamic of high-beta securities: they provide the potential for higher returns during market upswings while also exposing investors to greater losses during downturns. In essence, high-beta securities amplify market movements, making them more risky but potentially more rewarding.

In contrast, characteristics associated with underperforming the market regardless of movements, outperforming during market losses, or having no correlation with market trends do not accurately represent the behavior of a high-beta security.