📈 Beta Stock Calculator
Calculate a stock's beta (β) relative to the market
How to Use This Calculator
1
Enter Covariance
Provide the covariance between the stock returns and market returns.
2
Enter Market Variance
Input the variance of the market return series.
3
Click Calculate
Press Calculate to see the stock's beta.
Formula
β = Cov(Rs, Rm) / Var(Rm)
Where: Rs = stock returns, Rm = market returns
Example: If Cov = 0.0125 and Var = 0.0080, then β = 0.0125 / 0.0080 = 1.5625
About Beta Stock Calculator
Beta (β) measures a stock's sensitivity to market movements. A β above 1 implies the stock is more volatile than the market; below 1 implies less volatility.
When to Use This Calculator
- Portfolio construction: Target desired market exposure
- Risk analysis: Assess stock volatility vs. market
- Cost of equity: Use β in CAPM estimations
Tips
- Use sufficiently long, consistent return intervals
- Ensure both series use the same periodicity
- Outliers can distort covariance and variance
Frequently Asked Questions
What does a beta of 1 mean?
It means the stock moves in line with the market on average.
Can beta be negative?
Yes. A negative β indicates the stock tends to move opposite the market.
Which market index should I use?
Use a broad index that best represents the stock’s market (e.g., S&P 500 for U.S. equities).