How do you interpret a high value of portfolio beta?

A high value of portfolio beta indicates that the portfolio is more volatile than the overall market. Beta measures the sensitivity of the portfolio's returns to the changes in market returns. A beta greater than 1 suggests that the portfolio's price tends to increase or decrease in a greater magnitude compared to the market. Therefore, if the market rises, a high-beta portfolio may experience larger gains, but it will also likely incur larger losses when the market declines. This relationship characterizes the portfolio as having a high risk in comparison to market moves, which is why this interpretation is accurate.

In contrast, a high beta does not imply low risk; rather, it signifies higher risk. This is why other interpretations, such as high return potential with low risk, stable performance irrespective of the market, or low correlation with market trends, do not accurately reflect the nature of a high beta.