Have you ever noticed how on some days, it seems like the entire stock market is up, while on other days, everything is down? Why does this happen, and how does your favorite company’s stock react? On days when the overall market, like the S&P 500 index, has a great day, does the stock for a company like General Electric (GE) also go up? And if so, by how much?

It turns out that there is often a strong positive relationship between the performance of a single stock and the performance of the market as a whole. Financial experts don’t just guess at this relationship; they use a special tool to measure it precisely. This tool is called linear regression, and it’s much simpler than it sounds. At its core, it’s like drawing a special, super-accurate line right through a cloud of data points to see the trend.

This “special line” can tell us an incredible amount about a stock’s personality—is it aggressive and volatile, or is it stable and predictable? Let’s explore what this line is and how experts draw it.