Use this tool to calculate the Beta of a stock using real market data.
Please note that this tool is for educational and informational purposes only. If you notice any errors or unexpected results, please do send us an email or leave a note in the comments below.
This calculator helps you calculate the beta of a stock against a chosen benchmark. Here are just a few comments about the inputs:
- Ticker: Like our DRIP calculator, please use the Yahoo Finance format for the tickers. We do support a number of international markets, so you will have to append to the correct identifier for non-US stocks. As long as you use the Yahoo format, it should work fine. Here are a few examples:
- UK: Use “.L” – For Unilever Plc, you would use ULVR.L
- Canada: “.TO” – For Royal Bank of Canada, you would use RY.TO
- Australia: “.ASX”
- India: “.NS”
- Korea: “.KS”
- Taiwan: “.TW”
- Benchmark: You can use any stock or index as the benchmark for comparison purposes. Note that I’ve found comparison with indices maybe inaccurate, so you’re better of using the comparable ETF instead. Some common options include:
- S&P 500: “SPY” or “^GSPC”
- Nasdaq: “QQQ” or “^IXIC”
- FTSE 100: “ISF.L” or “^FTSE”
- NIFTY50: “^NSEI”
- KOSPI: “226490.KS”
- Dates: Please specify the dates for which you want the analysis to be performed
- Period: You can specify if you want to use daily returns, weekly returns, or monthly returns to calculate the Beta.
The calculator calculates the Beta using the returns for the benchmark and the stock with the chosen period/frequency (i.e. daily/weekly/monthly).
The calculated output is shown. Additional information, including normalized returns for the two securities/indices, the returns scatter plot, and the corresponding regression equation are shown.
What is Beta?
In the world of finance, Beta is a measure of a stock’s volatility in relation to the overall market. It’s a key component in the Capital Asset Pricing Model (CAPM), which investors use to calculate expected return on an investment, adjusted for risk.
It’s important to remember that in the quant world, “risk” and “volatility” are often conflated. Depending on your investment style, this could be true for you; however for long-term investors and those who like to truly invest in businesses as opposed to in stocks, risk and volatility should not be equated.
Nevertheless, it’s still an important metric to know for your stock as it helps you understand how a stock behaves in relation to the market.
A beta value of 1 indicates that a stock’s price tends to move with the market. A beta greater than 1 signifies that the stock is more volatile than the overall market – meaning it could potentially offer higher returns, but also comes with higher volatility. So a beta of 1.3 or 1.5 would mean the stock is very volatile.
Conversely, a beta less than 1 means the stock is less volatile than the market, possibly offering more stable returns but potentially lower gains.
Beta is important because it provides a clear, quantitative measure of a stock’s risk in relation to the market. This can help investors understand the risk they are taking on in their portfolio and make more informed investment decisions.
For instance, an investor with lower volatility tolerance might prefer stocks with a lower beta, while an investor with a higher tolerance might seek out stocks with higher betas in pursuit of greater returns.
Before You Go…
Hopefully you found this information useful. Please do let me know in the comments if you have any feedback, comments, or questions!
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by Andrew Garcia
Andrew, an alumnus of South Florida State College, loves finance, fintech, and coding. When he’s not crunching numbers at the bank, he’s passionately writing about personal finance and building calculators for PFF. See more.