Stock beta formula

There are two ways of calculating beta with Excel the first uses the variance and covariance functions while the second uses the slope functionThe corresponding formulae. To calculate Beta calculate the slope of series of returns of the stock and of the index.

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The formula for the beta calculation could then be written.

. In finance the beta β or market beta or beta coefficient is a measure of how an individual asset moves on average when the overall stock market increases or decreases. Return closing price opening priceopening price. Thus beta is a.

Excel provides a formula Slope Series1 Series2 to do that. If the SP 500 index rises or falls 10 youd expect a stock with a beta of two to move 20. However MarketXLS exposes the.

The beta coefficient formula is a financial metric that measures how likely the price of a stocksecurity will change concerning the movement in the market price. A beta of 050 means the stock is half as volatile. The beta denoted as Ba in the CAPM formula is a measure of a stocks risk volatility of returns reflected by measuring the fluctuation of its price changes relative to the.

In the second column add the corresponding closing price data for the stock in question and in. The Beta of the. In the first column insert the date range to be used to calculate the beta.

To calculate the beta of a security the covariance between the return of the security and the return of the market must be known as well as the varianceof the market returns. Beta Covariance of market and asset returns Variance of. Wide Range Of Investment Choices Including Options Futures and Forex.

The CAPM formula uses the total average market return and the beta value of the stock to determine the rate of return that shareholders might reasonably expect based on. A stock with a beta of 050 would.

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