Returns by period
| Stock return, % | Market return, % | Remove row |
|---|---|---|
Result
Beta coefficient
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This calculation is for informational purposes only and does not replace advice from a qualified professional. Formulas and rates may not fit your exact situation — double-check the figures before making decisions.
How it is calculated
Beta = covariance of stock and market returns ÷ variance of market returns. Covariance and variance here are computed over the entered periods as a full population, without a bias correction — with a large number of periods the difference from the sample estimate is negligible.
Beta = 1 means the stock on average moves in step with the market; beta above 1 means the stock is more volatile than the market (amplifying both gains and drops); beta below 1 means the stock is more stable than the market; a negative beta means the stock tends to move opposite the market, which is rare.
Accuracy depends heavily on the number and quality of periods: 3–4 data points give a very shaky estimate, so a reasonably reliable beta usually needs 24–60 monthly returns. The resulting beta is a standard input for the CAPM model when computing the cost of equity.