About the Stock Beta Calculator
This stock beta calculator measures how strongly a stock, fund or portfolio moves with the overall market. Paste a series of periodic returns for the stock and the same periods for a benchmark such as the S&P 500, and it calculates beta by regression, along with the correlation, R-squared, alpha and the volatility of both series.
A beta of 1 means the stock has historically moved in line with the market; 1.5 means it tended to move 50% more, and 0.5 half as much. Investors use beta to judge how much market risk a holding adds, to estimate cost of equity with CAPM, and to build portfolios with a target level of market exposure.
Use returns over matching periods — for example 36 or 60 monthly returns, the common choice of data providers. Returns should be simple percentage changes including dividends where possible. If the two lists have different lengths, only the overlapping first periods are used. Beta is backward-looking and can change over time.
With the default inputs, the beta (β) is 1.4. Change any value above to recalculate instantly.
How to use the stock beta calculator
- 1Download matching monthly (or weekly) closing prices for the stock and an index.
- 2Convert each series to percentage returns: (this price ÷ previous price − 1) × 100.
- 3Paste the stock returns and the market returns in the same order.
- 4Read beta, then check R-squared to judge how reliable the estimate is.
Formula and method
Beta is the slope of a least-squares regression of the stock’s returns Rs on the market’s returns Rm: the covariance between the two series divided by the variance of the market. Both are computed with sample (n − 1) formulas, which cancel in the ratio. A beta above 1 amplifies market moves; below 1 dampens them; a negative beta moves against the market.
Alpha is the regression intercept — the average return per period left over after accounting for market exposure. Correlation ρ measures how tightly the two series move together, and R² (ρ squared) is the share of the stock’s variance explained by the market. A high beta with a low R² means the estimate is less reliable.
- β
- Beta: sensitivity of the stock to market returns
- Rs, Rm
- Periodic returns of the stock and the market
- α
- Alpha: regression intercept per period
- ρ
- Correlation coefficient between the two return series
Worked examples
Twelve monthly returns for a growth stock
The stock’s returns swing wider than the market’s: its standard deviation is 2.83% a month versus 1.93%. With a correlation of 0.957, beta = 0.957 × 2.83 ÷ 1.93 ≈ 1.40, so the stock has tended to move about 40% more than the market, and the market explains about 91% of its variance.
A defensive stock
This stock moves in the same direction as the market but only about 0.29 times as much. Its alpha of about 0.47% per period shows it earned a steady return on top of its small market exposure — typical of a utility or consumer-staples name.
Frequently asked questions
What does a beta of 1.5 mean?+
A beta of 1.5 means the stock has historically moved about 1.5 times as much as the market: when the index rose 10%, the stock tended to rise about 15%, and when the index fell 10% the stock tended to fall about 15%. It carries more market risk than an average stock.
How is beta calculated?+
Beta is the covariance of the stock’s returns with the market’s returns divided by the variance of the market’s returns. It is the same as the slope of a regression line fitted through a scatter plot of stock returns against market returns, which is what spreadsheet SLOPE functions compute.
How many data points should I use to calculate beta?+
Common practice is 60 monthly returns (five years), or 36 months at minimum. Two years of weekly returns is another popular choice. Using daily data or short windows makes beta noisier and more affected by trading-time differences.
Can beta be negative?+
Yes. A negative beta means the asset has tended to move in the opposite direction to the market. Gold miners, some volatility products and put options can show negative betas, though a truly consistent negative beta is rare among ordinary stocks.
How do I calculate portfolio beta?+
Portfolio beta is the weighted average of each holding’s beta, using each position’s share of portfolio value as the weight. Alternatively, paste the portfolio’s own periodic returns into this calculator as the stock series.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.