What is a common measurement used to evaluate the performance of a stock relative to the market?

Beta is a common measurement used to evaluate the performance of a stock relative to the overall market. It indicates how much a stock's price is expected to move in relation to market movements. A beta of 1 means the stock moves with the market; a beta greater than 1 indicates higher volatility, meaning the stock is likely to experience larger price swings compared to the market. A beta less than 1 suggests that the stock is less volatile than the market.

This measure is crucial for investors who want to understand a stock’s risk in comparison to the general market, helping them make informed decisions about their investments. Other options, while useful in various contexts of financial analysis, do not serve the specific purpose of comparing a stock’s performance relative to the market in the same straightforward way that beta does. For instance, standard deviation measures the total volatility of a stock's returns, the Sharpe ratio evaluates risk-adjusted return, and the price to earnings ratio provides insights about the stock's valuation relative to its earnings, rather than its market performance.