This beta calculator allows you to measure the volatility of returns of an individual stock relative to the entire market.
Below is a screenshot of the beta calculator:
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The beta (β) of an investment security (i.e. a stock) is a measurement of its volatility of returns relative to the entire market. It is used as a measure of risk and is an integral part of the Capital Asset Pricing Model (CAPM). A company with a higher beta has greater risk and also greater expected returns.
Follow these steps to calculate β in Excel:
- Obtain the weekly prices of the stock
- Obtain the weekly prices of the market index (i.e. S&P 500 Index)
- Calculate the weekly returns of the stock
- Calculate the weekly returns of the market index
- Use the Slope function and select the weekly returns of the market and the stock, each as their own series
- The output from the Slope function is the β
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