Beta Calculator

Beta coefficient is another term for the beta. It is a measure of the risk of a stock or portfolio in comparison to the market risk. The CAPM (Capital Asset Pricing Model) uses the beta coefficient. It only takes systematic risk into account as it is related to the whole economy and not to a specific industry. And hence, we cannot avoid it. Beta Calculator helps in making calculations easier.

To calculate the beta of a security or portfolio, we divide the covariance between the return of security and market return by the variance of the market return.

The formula of beta is as follows:

Beta = Covariance (rs, rm) / Variance (rm)


rs = Return on Security

rm = Market Return

About the Calculator / Features

The beta calculator is an easy-to-go online tool that quickly calculates the beta coefficient by simply inserting the following figures into it:

  • Covariance (rs, rm)
  • Variance (rm)

Beta Calculator

How to Calculate using Beta Calculator

The user has to simply provide the following details into the calculator for a quick result of the calculation.

  • Covariance

Covariance is a tool for measuring the statistical relationships between two different variables. The result of covariance lies between -∞ to +∞. The formula for calculating Covariance is as follows:

Covariance = ∑ (xi – x̄) (yi – ȳ) / (n – 1)
Where, x & y = data value of x & y respectively.
x̄ = Average of data values of x
ȳ = Average of data values of y
n = number of data values

  • Variance

Variance is the square of standard deviation. It is denoted as (σ2). It is the total of each value in the data set subtracted by the average of the data set and divided by the total numbers in the data set less one. The variance can be calculated by using the following formula:

Variance = ∑ (xi – x̄)2 / (n – 1)

Sanjay Borad

Sanjay Bulaki Borad

Sanjay Borad is the founder & CEO of eFinanceManagement. He is passionate about keeping and making things simple and easy. Running this blog since 2009 and trying to explain "Financial Management Concepts in Layman's Terms".

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