Beta Calculator (CAPM & Regression)

Estimate a stock or portfolio’s beta, expected return, and risk vs. the market. Use simple CAPM inputs or paste historical return data for a regression-based beta.

Finance Investing Risk Analysis

Risk-free rate (R_f)

Annual risk-free rate (e.g., 10-year government bond).

Expected market return (R_m)

Long-run expected return of the market index.

Asset beta (β)

Use a known beta or compute it from regression/portfolio tabs.

Expected return

9.2%

From CAPM: R_e = R_f + β (R_m − R_f).

Market risk premium

6.0%

R_m − R_f.

Risk classification

Above-market risk (β > 1)

More volatile than the market.

Paste or type historical periodic returns for the asset and the market (e.g., monthly % returns). The calculator estimates beta using ordinary least squares (OLS): β = Cov(R_asset, R_market) / Var(R_market).

Period	Asset return (%)	Market return (%)

Estimated beta (β)

–

Slope of regression line of asset returns vs. market returns.

Alpha (intercept)

–

Average excess return not explained by market movements.

R²

–

Share of variance in asset returns explained by the market.

Compute a portfolio’s beta as the weighted average of component betas: β_p = Σ w_i β_i, where weights are based on market value.

Asset	Value	Beta (β)	Weight

Portfolio beta (β_p)

–

Weighted average of component betas.

Total portfolio value

–

Sum of all asset values.

Risk classification

–

Compare β_p to 1 to gauge risk vs. market.

What is beta in finance?

In finance, beta (β) measures how sensitive an asset or portfolio is to movements in the overall market. It is a key input in the Capital Asset Pricing Model (CAPM) and in risk management.

β = 1: the asset tends to move in line with the market.
β > 1: the asset is more volatile than the market (higher risk, higher expected return).
β < 1: the asset is less volatile than the market (defensive).
β < 0: the asset tends to move opposite to the market (rare, useful for hedging).

CAPM beta and expected return formula

Capital Asset Pricing Model (CAPM)

\( R_e = R_f + \beta (R_m - R_f) \)

\( R_e \): expected return of the asset
\( R_f \): risk-free rate
\( R_m \): expected market return
\( \beta \): beta of the asset or portfolio

How regression beta is calculated from returns

When you have historical return data, beta is estimated using a simple linear regression of asset returns on market returns:

Regression beta

\( \beta = \dfrac{\mathrm{Cov}(R_\text{asset}, R_\text{market})}{\mathrm{Var}(R_\text{market})} \)

In a regression equation \( R_\text{asset} = \alpha + \beta R_\text{market} + \varepsilon \), β is the slope, α is the alpha (excess return), and R² measures how well the market explains the asset’s movements.

Portfolio beta formula

For a portfolio of assets, beta is the weighted average of individual betas, where weights are based on market value:

\( \beta_p = \sum_{i=1}^{n} w_i \beta_i \)

\( \beta_p \): portfolio beta
\( w_i \): weight of asset i in the portfolio (value of i / total value)
\( \beta_i \): beta of asset i

Interpreting your beta results

Low beta (0–0.8): lower volatility; often defensive sectors (utilities, consumer staples).
Market-like beta (~1): diversified funds or broad index ETFs.
High beta (> 1.2): growth stocks, cyclical sectors; more sensitive to market swings.
Negative beta: moves opposite to the market; some hedging instruments or safe-haven assets.

This tool is for educational and planning purposes only and does not constitute investment advice. Always consider multiple risk measures (volatility, drawdown, liquidity, fundamentals) before making decisions.