Stock Beta Calculator
Beta from Covariance
Calculate beta using covariance and variance
Beta from Correlation
Calculate beta using correlation and standard deviations
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Levered / Unlevered Beta
Convert between levered and unlevered beta
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Formula
Beta = Cov(Ri, Rm) / Var(Rm) | Beta = Correlation * (sigma_stock / sigma_market) | Levered Beta = Unlevered Beta * (1 + (1-Tc)*D/E)
Frequently Asked Questions
What is stock beta?
Beta measures a stock's sensitivity to market movements. A beta of 1 means the stock moves with the market, above 1 means it's more volatile, and below 1 means it's less volatile. Negative beta (rare) means the stock moves opposite to the market.
What is the difference between levered and unlevered beta?
Levered beta includes the effect of a company's debt (financial risk), while unlevered beta isolates pure business risk by removing the impact of leverage. Unlevered beta is used to compare companies with different capital structures.
How is beta used in investing?
Beta is used in the CAPM to calculate expected return, in portfolio construction to manage risk, and in valuation to determine appropriate discount rates. Defensive investors prefer low-beta stocks while aggressive investors may seek high-beta stocks.
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