Beta Stock Calculator
Calculate stock beta coefficient to measure systematic risk and market correlation
Calculate Stock Beta Coefficient
Stock ticker symbol (e.g., AAPL, MSFT, GOOGL)
Market index for comparison
Enter historical stock prices separated by commas (minimum 2 prices)
Enter historical market prices (same periods as stock prices)
Beta Calculation Results
Formula: β = Covariance(Stock Returns, Market Returns) / Variance(Market Returns)
Returns Calculation: Return = (Price_t+1 - Price_t) / Price_t
Beta Interpretation
Please enter at least 2 price points for both stock and market.
Example: Electronic Arts (EA) vs S&P 500
Real-World Example
Stock: Electronic Arts (EA)
Benchmark: S&P 500 (SPY)
Analysis Period: 5 years of monthly data (60 data points)
Beta Result: 0.90
Interpretation
β = 0.90 means:
• EA is 10% less volatile than the S&P 500
• If market moves up 10%, EA typically moves up 9%
• If market moves down 10%, EA typically moves down 9%
• EA is considered a defensive stock with lower systematic risk
Beta Interpretation Guide
β > 1
More volatile than market
Amplifies market movements
β = 1
Mirrors market volatility
Moves with market exactly
0 < β < 1
Less volatile than market
Defensive characteristics
β = 0
No market correlation
Independent movements
β < 0
Negative correlation
Moves opposite to market
Data Collection Tips
Use 2-5 years of monthly price data for best results
Ensure stock and market data cover same time periods
Use adjusted closing prices to account for splits and dividends
Choose appropriate benchmark index for the stock sector
Understanding Stock Beta
What is Beta?
Beta (β) is a measure of systematic risk that compares a stock's volatility to the overall market. It indicates how much a stock's price moves relative to market movements, helping investors understand the stock's risk profile and potential returns.
Why is Beta Important?
- •Measures systematic risk that cannot be diversified away
- •Essential input for CAPM and portfolio optimization
- •Helps in risk assessment and asset allocation decisions
- •Used in performance attribution and risk management
Beta Calculation Formula
β = Covariance(Stock Returns, Market Returns) / Variance(Market Returns)
Return = (Price_t+1 - Price_t) / Price_t
- Covariance: Measures how stock and market returns move together
- Variance: Measures market return volatility
- Returns: Percentage change in prices between periods
Best Practice: Use at least 24-60 monthly observations for reliable beta estimates. Daily data can be noisy, while monthly data provides better statistical stability.
Investment Applications
- • Portfolio risk assessment and optimization
- • Cost of equity calculation (CAPM model)
- • Performance attribution analysis
- • Hedge ratio determination
- • Investment strategy development