Investing and Financial Markets

How do you Calculate Stock Beta in Excel?

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2011-08-10 21:54:45
2011-08-10 21:54:45

You need to use the variance and covariance functions in Excel

1. Calculate the covariance of the stock returns with respect to an index

2. Calculate the variance of the index

3. Divide the first number by the second.

See the related link for a spreadsheet

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Using Excel: plot the benchmark returns against the stock returns. add a linear trendline and display the equation Beta is the slope of the trendline. Examine the spreadsheet in the related link for a worked example


calculate the effective return (mean return minus the risk free rate) divided by the beta. the excel spreadsheet in the related link has an example.


Check out these websites: http://faculty.babson.edu/academic/Beta/CalculateBeta.htm http://www.money-zine.com/Investing/Stocks/Stock-Beta-and-Volatility/


The Beta of a stock is always dynamic.


You'll need a spreadsheet like Excel. Do the following. 1) Get percentage daily returns for the stock between two dates (I suggest every day for a year). You can get this historical data from Yahoo Finance 2) Pick a benchmark index 3) Get percentage daily returns for the index between the two dates as well 4) Calculate the covariance of the stock with respect to the index and divide by the variance of the stock [the two excel functions you'll need are covariance.p() and variance.p() ] Go to the related link below for a spreadsheet to do this.


First decide what the benchmark index is (i.e the FTSE, DOW Jones, commodities index etc). Then plot the benchmark returns against the stock returns. Then add a straight line of best fit. The beta is the slope of the trendline Check out the Excel spreadsheet in the related link.


Beta measures a stock's volatility (the swings up and down in price). The market as a whole has a beta of 1.0, but each stock is determined a beta value from a history of it's stock movements. Riskiness equates to the stock losing value and high beta stocks are more prone to falling faster.



how to calculate stock market index


It is impossible to calculate a Betta. A Betta is a fish.


You can use the slope function on excel which takes a cell range representing the Y-Variable and another cell range representing the X-Variables. For instance the Y-Variable may be a column of excess returns for a stock and the X-Variable maybe the column of risk premia.


MS-Excel is a powerful worksheet & you calculate , syncronize many hard calculation, so MS-Excel is called Excel.


A beta of 1 indicates that the security's price will move with the market.


Look up Bombay Stock Exchange www.bseindia.com and Nantional Stock Exchange www.nseindia.com for beta values of Indian companies.


If market rises by 100% then the stock rises by 120%


Allows Excel to automatically calculate formulas in real time. When a referenced cell changes, the formula automatically updates.


Calculate means Excel will evaluate formulas and functions to display the result. You can turn calculate to manual or auto. When it is on auto, everything is updated in real time. Manual will update when you open Excel or requires to you click the calculate button every time you want to see results.


Bill Dukes has $100,000 invested in a 2-stock portfolio. $75,000 is invested in Stock X and the remainder is invested in Stock Y. X\'s beta is 1.50 and Y\'s beta is 0.70. What is the portfolio\'s beta? A. 0.98 B. 1.30 C. 1.39 D. 1.00 E. 1.44 You can also get answer on onlinesolutionproviders com thanks


You can calculate quantity in Excel with the SUM function.


The related link provides an excel template and some notes on how to calculate the sharpe ratio..pretty simple and effective.


The beta of a firm's stock is dependent on the volatility of the stock relative to the overall market. So if the stock's volatility increased relative to the overall market, it's beta would increase as well.


There is no single function in Excel.You calculate the mean (average).For each observation, you calculate its deviation from the mean.Convert the deviation to absolute deviation.Calculate the mean (average) of these absolute deviations.


Utilizing the visual basic functions built into excel worksheets you can calculate degrees of freedom. The function call that you use for this is "degrees_freedom".


Beta describes the relationship between the volatility of a stock with respect to the market as a whole (which the market represented by a suitable index). A beta of less than one means that the stock is less volatile than the index, and vice-versa. Basically, if a benchmark returns 10%, and you're considering a stock with a beta of 1.5%, that means the stock needs to have a return of greater than 15% for it to be worthwhile. The related link contains much more information


Beta is a measure of a stock's volatility. The price of a stock with a beta of 1.0 rises and falls on average with the overall market. A beta greater than 1.0 could mean larger prices fluctuations, and a beta of less than 1.0 indicates a more tame stock. For example, if Company A has a beta of 1.2 and the market goes up 10% in a given period of time then Company A should increase about 12% in value. If the market falls 20% then Company A's stock price should drop 24%.



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