Skip to content
Finance Calc Kit
Investments

Stock Beta Calculator

Calculate a stock beta coefficient relative to the market using covariance/variance or CAPM method in real time.

Beta inputs

Stock beta

1.2500

Systematic risk relative to the market (beta = 1)

Beta is 1.2500. The stock is 25.00% more volatile than the market.

Stock beta calculation

Open to see each step from your inputs to the result.

  1. Calculate beta using covariance and variance

    β=Covariance(Re,Rm)Variance(Rm)\beta = \frac{\text{Covariance}(R_e, R_m)}{\text{Variance}(R_m)}

Report tool

What stock beta measures

Beta (β\beta) quantifies a stock's systematic risk relative to the broader market. A beta of 1 means the stock tends to move in line with the market. Beta above 1 signals higher volatility; beta below 1 signals defensive behavior. Beta is a core input in the Capital Asset Pricing Model (CAPM) used alongside our CAPM calculator and portfolio beta calculator.

Covariance and variance method

Beta equals the covariance between a stock's returns and market returns divided by the variance of market returns. This is the standard regression slope of stock returns on market returns.

β=Cov(Re,Rm)Var(Rm)\beta = \frac{\text{Cov}(R_e, R_m)}{\text{Var}(R_m)}

Worked example: covariance method

If covariance between stock and market returns is 0.05 and market variance is 0.04, then beta = 0.05 / 0.04 = 1.25. The stock is about 25% more volatile than the market on a systematic basis.

CAPM rearrangement method

When expected returns are known, beta can be derived by rearranging the CAPM equation:

β=E(Re)−RfE(Rm)−Rf\beta = \frac{E(R_e) - R_f}{E(R_m) - R_f}

Where E(Re)E(R_e) is expected stock return, E(Rm)E(R_m) is expected market return, and RfR_f is the risk-free rate.

Interpreting beta values

  • Beta = 0: uncorrelated with the market (cash-like assets).
  • 0 < beta < 1: defensive, less volatile than the market.
  • Beta = 1: market-level systematic risk.
  • Beta > 1: aggressive, amplifies market swings.
  • Beta < 0: inverse relationship (some hedges or gold in certain periods).

Frequently asked questions

What is a good beta for a stock?
There is no universal good beta. Conservative investors may prefer beta below 1. Growth investors may accept beta above 1 for higher expected return potential. Match beta to your risk tolerance and portfolio goals.
Which beta calculation method should I use?
Use the covariance method when you have historical return series or regression statistics. Use the CAPM method when you have expected returns and a risk-free rate from analyst forecasts or policy rates.
Does beta include company-specific risk?
No. Beta captures systematic (market) risk only. Unsystematic risk from individual company events is diversified away in broad portfolios.
Can beta be negative?
Yes. Negative beta means the asset tends to move opposite the market. Inverse ETFs and some alternative assets can show negative beta over specific periods.
How often does beta change?
Beta is estimated from historical or expected data and shifts with market conditions, business model changes, and leverage. Recalculate periodically rather than treating beta as permanent.

Resources and references

The formulas and methods in this calculator were checked against these independent sources.