A beta of 1.0 implies that an asset moves in line with the market, while a beta below or above 1.0 indicates under- or over-sensitivity, respectively. Passive investment vehicles typically aim to capture beta, whereas hedge funds and active managers aim to generate alpha on top. Understanding beta helps allocators assess risk exposure and diversification potential across a portfolio. Many Market Neutral strategies attempt to reduce beta to near zero, isolating pure alpha. Beta is also a core concept in calculating performance metrics and constructing balanced mandates.