Beta Calculator

How to Use This Calculator

1. Enter Stock Returns and Market Returns as comma-separated percentages for the same time periods.
2. The calculator computes beta, correlation, and R² from the returns series.
3. Use From Variance & Covariance tab if you have those statistics already.
4. Use Adjusted Beta tab to apply Blume's mean-reversion adjustment.
5. Open Professional for Hamada equation (levered/unlevered beta) and CAPM expected return.

Formula

Example

Frequently Asked Questions

• What is stock beta? ▼
  Beta (β) measures a stock's sensitivity to market movements. A beta of 1.0 means the stock moves with the market. Beta > 1 means more volatile than the market; beta < 1 means less volatile. Beta = Cov(stock, market) / Var(market).
• What is adjusted beta (Blume)? ▼
  Blume's (1975) adjustment corrects for beta's tendency to revert toward 1 over time. Adjusted β = 0.67 × Raw β + 0.33. A raw beta of 1.5 becomes adjusted beta of 1.34. Bloomberg and Barra use similar adjustments in their beta estimates.
• What is unlevered beta? ▼
  Unlevered beta (asset beta) removes the effect of financial leverage using the Hamada equation: β_U = β_L / (1 + (1−T) × D/E). It represents the risk of a company's operations alone, independent of capital structure. Useful for comparing firms with different leverage.
• What does R² mean in beta analysis? ▼
  R² (coefficient of determination) tells you how much of a stock's return variance is explained by market movements. R² = 0.30 means 30% of the stock's volatility is market-driven, and 70% is company-specific (idiosyncratic) risk.
• How often should beta be recalculated? ▼
  Beta is typically estimated using 2–5 years of monthly returns. Betas change over time as business mix, leverage, and competitive dynamics evolve. Bloomberg uses 2 years of weekly data; Value Line uses 5 years of monthly data. Recalculate quarterly for active analysis.

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