Which sector is likely to have a beta greater than 1?

The automobile manufacturing sector typically has a beta greater than 1 due to its higher exposure to market volatility and economic cycles. Beta is a measure of a stock's or a sector's volatility in relation to the overall market. Generally, sectors that are more sensitive to economic conditions, such as consumer spending and economic growth, will exhibit higher betas.

Automobile manufacturers are closely tied to consumer demand, which can fluctuate based on economic indicators like unemployment rates, consumer confidence, and disposable income. When the economy is booming, demand for new vehicles tends to rise significantly, leading to higher profits and stock prices, which can result in a beta greater than 1. Conversely, during economic downturns, the demand for automobiles can decline sharply, leading to increased volatility in the sector’s performance.

In contrast, sectors like utilities, healthcare facilities, and grocery stores are typically regarded as more stable and less sensitive to economic fluctuations, often exhibiting lower betas. These sectors provide essential services or products that remain in demand regardless of the economic climate, leading to less volatility in their stock prices compared to more cyclical sectors like automobile manufacturing.