Beta Stock Calculator
Beta is the single number that tells you how much a stock tends to move relative to the market as a whole. A beta of 1 means the share, on average, rises and falls in step with the market. A beta above 1 means it swings more than the market, amplifying both the gains and the losses, while a beta below 1 means it moves less and rides out the ups and downs more gently. A negative beta, which is rare, means the share has tended to move in the opposite direction to the market. This calculator works out beta the textbook way: it takes a series of stock returns and the matching market returns over the same periods, then divides the covariance between them by the variance of the market returns. Alongside the beta it reports the correlation, which tells you how tightly the two move together, and the volatility of both the stock and the market so you can see where the beta comes from. Enter the percentage return for the stock and for a market index such as the NZX 50 or S&P 500 for each period, monthly figures work well, and the results update as you type. Beta is a backward-looking measure built from past returns, so treat it as a guide to typical behaviour rather than a forecast, and remember that a longer, cleaner run of data gives a steadier estimate.
Enter the return for each period as a percentage. Leave a period blank to ignore it; you need at least two paired periods.
A beta of 1.64 means the stock has historically moved about 1.64 times as much as the market, so it is more volatile than the market as a whole.
Beta is estimated from the returns you enter and is a backward-looking measure. More periods of clean data give a more reliable figure. Estimate only, not financial advice.
How it works
Beta equals the covariance between the stock's returns and the market's returns divided by the variance of the market's returns. Covariance captures how the two move together: for each period you multiply the stock's distance from its average return by the market's distance from its average, and add those products up. Variance captures how much the market moves on its own: the sum of the squared distances of the market from its own average. Dividing one by the other strips out the market's raw size and leaves the sensitivity of the stock to the market. Correlation is the same covariance divided by the product of the two standard deviations, which rescales it to sit between minus 1 and plus 1.
Worked example
Over five periods the stock returns are 3.0%, -3.0%, 4.5%, 1.0% and -1.0%, averaging 0.9%, while the market returns are 2.0%, -1.5%, 3.0%, 0.5% and -0.5%, averaging 0.7%. Summing the products of the paired deviations gives a covariance total of 21.85, and summing the squared market deviations gives a variance total of 13.30. Beta is 21.85 / 13.30 = 1.64. The correlation works out to 0.996, showing the stock and market move almost in lockstep, and the stock's volatility of 2.69% against the market's 1.63% is what pushes the beta above 1.
Related calculators
- CAPM Calculator: expected return from beta.
- Covariance Calculator: covariance of two series.
- Correlation Coefficient Calculator: strength of a relationship.
- Standard Deviation Calculator: volatility of returns.
- Variance Calculator: variance from data.