What is the SLOPE Function?
The SLOPE Function is categorized under Statistical functionsFunctionsThe SLOPE Function is categorized under Statistical functions. It will return the slope of the linear regression line through the data points in known_y's and known_x's. In financial analysis, SLOPE can be useful in calculating beta for a stock. Formula = LOPE(known_y's, known_x's) The function uses the. It will return the slope of the linear regression line through the data points in known_y’s and known_x’s. In financial analysisFinancial Analyst Job DescriptionSee a real Financial Analyst Job Description including all the skills, experience, and education required to be the successful candidate for the job. Perform financial forecasting, reporting, and operational metrics tracking, analyze financial data, create financial models, the SLOPE function can be used to calculate the beta of a stock.
Slope / Beta Formula
=SLOPE(known_y’s, known_x’s)
The SLOPE function uses the following arguments:
- Known_y’s (required argument) – It is an array or range of numeric dependent data points.
- Known_x’s (required argument) – It is the set of independent data points.
Notes
- The length of the known_x’s array should be the same length as the known_y’s, and the variance of the known_x’s must not be zero.
- The function uses the following equation to calculate the slope of the linear regression line through a set of given points:
Where:
X and Y are the sample means (the averages) of the known x’s and the known y’s.
- If an array or reference argument contains text, logical values, or empty cells, the values are ignored; however, cells with the value zero are included.
- The arguments must be either numbers or names, arrays, or references that contain numbers.
- The algorithm used in the SLOPE and LINEST functions are different. The difference between these algorithms can lead to different results when data is undetermined and collinear. For example, if the data points of the known_y’s argument are 0 and the data points of the known_x’s argument are 1, then:
- SLOPE will return a #DIV/0! error.
- LINEST will return a value of 0. The LINEST algorithm is designed to return reasonable results for collinear data, and in this case, at least one answer can be found.
How to use the SLOPE Function in Excel?
To understand the uses of the SLOPE function, let us consider an example:
Example
Suppose we are given the following data about the known_x’s and known_y’s:
To calculate the slope of the linear regression line through the known_x’s and known_y’s, we will use the formula below:
We get the result below:
Things to remember about the SLOPE Function
- #N/A! error – Occurs when the given known_x’s and known_y’s are of different lengths.
- #DIV/0! error – Occurs when:
- The variance of the given known_x’s evaluates to zero; or
- Any of the given known_x’s or known_y’s arrays are empty.
Click here to download the sample Excel file
Additional resources
Thanks for reading CFI’s guide to important Excel functions! By taking the time to learn and master these functions, you’ll significantly speed up your financial analysis. To learn more, check out these additional resources:
- Excel Functions for FinanceExcel for FinanceThis Excel for Finance guide will teach the top 10 formulas and functions you must know to be a great financial analyst in Excel. This guide has examples, screenshots and step by step instructions. In the end, download the free Excel template that includes all the finance functions covered in the tutorial
- Advanced Excel Formulas Course
- Advanced Excel Formulas You Must KnowAdvanced Excel Formulas Must KnowThese advanced Excel formulas are critical to know and will take your financial analysis skills to the next level. Advanced Excel functions you must know. Learn the top 10 Excel formulas every world-class financial analyst uses on a regular basis. These skills will improve your spreadsheet work in any career
- List of Finance CertificationsTop Finance CertificationsList of the top finance certifications. Get an overview of the best financial certifications for professionals around the world working in the field. This guide compares the top 6 programs to become a certified financial analyst from various program providers such as CFA, CPA, CAIA, CFP, FRM, FMVA