Stock Beta Calculator
Calculate a stock’s beta from its returns and the market’s returns — covariance ÷ variance — plus correlation, R-squared, alpha and annualized volatility of both series.
How it works
β = Cov(stock, market) ÷ Var(market) (sample, n − 1) · correlation ρ = Cov ÷ (σ_stock × σ_market) · R² = ρ² · alpha = mean stock return − β × mean market return · annualized volatility = σ × √(periods per year)
Beta measures how much a stock tends to move when the market moves — the slope of a regression of its returns on the index’s returns. A beta of 1 moves with the market, 1.5 moves about 50% more and 0.5 about half as much; a negative beta tends to move the other way. Beta captures only market (systematic) risk, which is why it is the risk measure in CAPM and the cost of equity. Data providers typically use 60 monthly or 104 weekly returns against a broad index, so your result will vary with the period, frequency and benchmark you choose.
Worked example
For the 12 monthly returns in the boxes the stock averages 1.25% a month and the market 0.93%. Their covariance divided by the market’s variance gives a beta of 1.61: the stock moved about 1.61% for each 1% market move. The correlation is 0.97, so the market explains 94.3% of the stock’s moves (R-squared), and annualized volatility is 12.48% for the stock against 7.54% for the market.
Sources: Investopedia — Beta: definition, calculation and explanation · Aswath Damodaran (NYU Stern) — Estimating risk parameters
Frequently asked questions
How many data points do I need for beta?
At least 36 monthly or about 100 weekly returns for a stable estimate. With only a few points a single extreme month can swing the result.
Should I use prices or returns?
Returns. Convert prices to period returns first ((price ÷ previous price − 1) × 100), and include dividends if you have total-return data.
What is the difference between beta and correlation?
Correlation shows how closely two series move together (−1 to 1); beta also scales by relative volatility. A stock can be highly correlated with the market yet have a low beta if it moves only a little.
What is adjusted beta?
Many providers (such as Bloomberg) shrink raw beta toward 1 with adjusted β = 0.67 × raw β + 0.33, because betas tend to drift toward the market average over time.
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Educational estimate, not investment, trading or tax advice. Brokers, exchanges and data providers use their own conventions, fees and figures — confirm with your broker, the exchange’s documentation or a licensed adviser before acting.