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How Does Brookline Bancorp, Inc. (NASDAQ:BRKL) Affect Your Portfolio Volatility?

Simply Wall St
·3 min read

Anyone researching Brookline Bancorp, Inc. (NASDAQ:BRKL) might want to consider the historical volatility of the share price. Modern finance theory considers volatility to be a measure of risk, and there are two main types of price volatility. 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 other type, which cannot be diversified away, is the volatility of the entire market. Every stock in the market is exposed to this volatility, which is linked to the fact that stocks prices are correlated in an efficient market.

Some stocks mimic the volatility of the market quite closely, while others demonstrate muted, exagerrated or uncorrelated price movements. Beta can be a useful tool to understand how much a stock is influenced by market risk (volatility). However, Warren Buffett said 'volatility is far from synonymous with risk' in his 2014 letter to investors. So, while useful, beta is not the only metric to consider. To use beta as an investor, you must first understand that the overall market has a beta of one. Any stock with a beta of greater than one is considered more volatile than the market, while those with a beta below one are either less volatile or poorly correlated with the market.

View our latest analysis for Brookline Bancorp

What does BRKL's beta value mean to investors?

Using history as a guide, we might surmise that the share price is likely to be influenced by market volatility going forward but it probably won't be particularly sensitive to it. Share price volatility is well worth considering, but most long term investors consider the history of revenue and earnings growth to be more important. Take a look at how Brookline Bancorp fares in that regard, below.

NasdaqGS:BRKL Income Statement April 16th 2020
NasdaqGS:BRKL Income Statement April 16th 2020

How does BRKL's size impact its beta?

Brookline Bancorp is a small company, but not tiny and little known. It has a market capitalisation of US$835m, which means it would be on the radar of intstitutional investors.

What this means for you:

Brookline Bancorp has a beta value quite close to that of the overall market. That doesn't tell us much on its own, so it is probably worth considering whether the company is growing, if you're looking for stocks that will go up more than the overall market. In order to fully understand whether BRKL is a good investment for you, we also need to consider important company-specific fundamentals such as Brookline Bancorp’s financial health and performance track record. I highly recommend you dive deeper by considering the following:

  1. Future Outlook: What are well-informed industry analysts predicting for BRKL’s future growth? Take a look at our free research report of analyst consensus for BRKL’s outlook.

  2. Past Track Record: Has BRKL 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 at the free visual representations of BRKL's historicals for more clarity.

  3. Other Interesting Stocks: It's worth checking to see how BRKL measures up against other companies on valuation. You could start with this free list of prospective options.

If you spot an error that warrants correction, please contact the editor at editorial-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.