Look at the picture comparing the 5 year returns for Tesla (TSLA) and S&P 500 (^GSPC). It's obvious that the return volatility (i.e. standard deviation of returns) of Tesla stock is at least 5-10 times greater than that of S&P 500 (the blue line). Yet, if you look up Tesla's 5 year beta (on the summary page of Yahoo Finance (Links to an external site.)), it is only around 2 suggesting that TSLA is only twice as volatile as the market (represented by S&P500 index).

How do you explain this discrepancy between what standard deviation tells you (that TSLA is 5 to 10 times more volatile than the market) and what beta tells you (that the stock is about twice as risky as the overall market (SP500))?

TSLA vs SP500.PNG

Tesla, Inc. (TSLA) 668.06 -5.52 (-0.82%) 664.55 -3.51 (-0.53%) Sumy Como 67358 6424 Secais 103 66400 67150100 CM Apr 2201 May 03.2031 NANIA 60.1014 Bewe AWA Chant Ouerunt TA2C40K 3000, Vchoolinance un Tesla, Inc. (TSLA) 668.06 -5.52 (-0.82%) 664.55 -3.51 (-0.53%) Sumy Como 67358 6424 Secais 103 66400 67150100 CM Apr 2201 May 03.2031 NANIA 60.1014 Bewe AWA Chant Ouerunt TA2C40K 3000, Vchoolinance un