How to Calculate Beta In Excel - All 3 Methods (Regression, Slope & Covariance)

How to Calculate Beta In Excel - All 3 Methods (Regression, Slope & Covariance)

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What is Beta
A stock that swings more than the market over time has a beta greater than 1.0. If a stock moves less than the market, the stock's beta is less than 1.0. High-beta stocks tend to be riskier but provide the potential for higher returns; low-beta stocks pose less risk but typically yield lower returns.

As a result, beta is often used as a risk-reward measure meaning it helps investors determine how much risk their willing to take to achieve the return for taking on that risk. A stock's price variability is important to consider when assessing risk. If you think of risk as the possibility of a stock losing its value, beta has appeal as a proxy for risk.

How to Calculate Beta
To calculate the beta of a security, the covariance between the return of the security and the return of the market must be known, as well as the variance of the market returns.

AJL Investing

[muhammadluthhamzahbinmoham]

Just to add a quick excel tip, instead of dragging the formula down the column, you can simply double click the lower right side of the box to auto apply the formula down the columb

[JaphethJev]

Thank you very much. The video is concise and clear.

[kunalparmar]

Thanks for sharing, it made the calculation very easy

[valuablememories]

Hello! I need help please.. When I try =ln(B3/B2) it shows (error) #Value! Everytime as the answer is negative. How Should I do? I can´t move on from there.

[Eric-cjqn]

Hello, why is 'ln' used instead of calculating the percentage monthly/weekly change?

[OscarDreno]

Hi Aaron, this video is perfect for helping me with my uni assignment right now. Following all your instructions I got a beta of -0.01817 (in our assignment task sheet they should be around 0.5-3) I just wanted to know your thoughts on the value I got. It was for Air New Zealand and I've tried all 3 ways to get a better value but it's all been -0.01817, it's really throwing me off what to say for the rest of my assignment, do you have ideas on why my value seems to be such an outlier? Thanks

[rockglassice]

Hello and thanks for your video, what if you try to plot the data? What would be the outcome? Does it make sense? Or it is better to rely on your regression figures only?

[OwenLikesGoats]

For some reason I cannot download market data for FTSE100, only individual companies

[OniladoOluwabukola]

Hi, don't you need to convert the USD stock to GBP? Since the market is in LSE

[MizzlikkleYarg]

How are you certained that the dates of the Market adjusted beta matched the ones of the S&P500 when you brought it over to the sane excel sheet?

[leenakapse]

Thank you so much. Helpful for my research

[muhammedkizilboga]

Thank you very much, you made it very easy to understand.

[NoLittlePink]

I just happened to be doing my M&A assignment and came across this video its so helpful thank you!

[HM-snxy]

Aaron, please help me with a regression problem. Thanls

[jandietrich]

Hi Aaron, can you explain why you use logarithmic returns?

[anujsharma]

Hi Aaron, can you help with Plotting returns on two stocks on y-axis and the market on X-axis to compare the slopes?

I see you are simply doing ln(return at t/return at t-1) on a daily basis, shouldn't it be monthly which is the industry standard, so it should be ln(return at t/return at t-30) ??? I am new to this so please educate me :D

[usualkate]

Perfect! Thanks! Why’re not u my teacher at

[ayechanpyaethiri]

Can beta from the regression and slope be different? Because I got different numbers but if I round it they both are the same. Is that right or wrong? I need help.

[BigMackk]

Thank you Aaron! Precise video which helped a lot!

Cheers