How to Calculate Beta In Excel - All 3 Methods (Regression, Slope & Covariance)
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- Опубліковано 12 вер 2024
- 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
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
or ctrl+D or ctrl+R to fill down or right
Thank you very much. The video is concise and clear.
Thanks for sharing, it made the calculation very easy
Thank you very much, you made it very easy to understand.
Thank you so much. Helpful for my research
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
Thank you Aaron! Precise video which helped a lot!
Cheers
Happy to help!
I just happened to be doing my M&A assignment and came across this video its so helpful thank you!
Hello, why is 'ln' used instead of calculating the percentage monthly/weekly change?
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?
Great video, it actually cleared up some of my confusion because i kept getting different numbers when using the slope and variance methods
Happy to help!
Thank you sir
Love from India
You rock ma man!!
Hi, don't you need to convert the USD stock to GBP? Since the market is in LSE
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.
Thank you! Very helpful!
Perfect! Thanks! Why’re not u my teacher at Uni??????
For some reason I cannot download market data for FTSE100, only individual companies
hey Aaron, Wow, just wow!
Wooooooh surely beautiful, though Slope function was new, thanks for help.:):)
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?
Thank you so much
Hi Aaron, can you explain why you use logarithmic returns?
Thank you Aron
Aaron, please help me with a regression problem. Thanls
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
Thank you for the helpful video
would be very helpful if you said the keyboard shortcuts you do
Hi Aron can u try to be a little slow plz for beginners ... Hv tried but nop
Hi Aaron, can you help with Plotting returns on two stocks on y-axis and the market on X-axis to compare the slopes?
Great 👍👍it helps me, thanks
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.
What are the pros and cons for each method?
I can't seem to get the correct Beta no matter what I try. I find the returns and all following all the methods. But when I graph the returns in comparison to the market I notice the returns of the stock move on a much larger scale than the market so it should have a greater than 1 beta but i'm no where near that. how should i correct?
whats the differnce between adjusted close and the "normal" close?
Adjusted close prices are generally considered more accurate for analyzing a portfolio's returns because they account for any corporate actions, such as stock splits or dividends, that may affect the stock price. Adjusted close prices are also adjusted for any stock buybacks or spin-offs that may have occurred. On the other hand, close prices are simply the price of the stock at the end of the trading day, without any adjustments. Therefore, if you want a more accurate analysis of your portfolio's returns, it is recommended to use adjusted close prices.
why my excel cant have format like that ?
I cant find the download button, it isnt there for me. For some reason S&P and Dow dont show a download button but NASDAQ does, is that weird?
Some market indexes on yahoo finance do not provide the option to download a CSV file. This is due to some licensing terms between yahoo and the index provider.
Hello,
Could you please help me out here. I did exactly what you did but i get a negative beta
Mine is -0.2713…
Negative beta isn't wrong. It just means that ur portfolio/stock is negatively correlated to the market index. Meaning that when the market index rises, your portfolio/stock drops and vice versa when the market index drops.
@@dylanloo9856 thanks for your answer
It was very helpful
Thx
Is this beta levered or unlevered?
Unlevered
The regression analysis gives us the levered beta because it measures the sensitivity of a stock's returns to the returns of the market, taking into account the company's capital structure, which includes debt financing.
This was better explained than in my course at Harvard (Jk, I don't go at Harvard)
There is no download data button for me... what am I doing wrong?
Some market indexes on yahoo finance do not provide the option to download a CSV file. This is due to some licensing terms between yahoo and the index provider.
I dont have the "Download data" option.
Some market indexes on yahoo finance do not provide the option to download a CSV file. This is due to some licensing terms between yahoo and the index provider.
yeah this is not helping me at all lol i have gotten such wrong answers and i don’t know what i’m doing
why u hide to view and calculation ?
I didn’t? Haha
What are the pros and cons for each method?
As Aaron demonstrated, they are all the same, all use the same data. So all are good. Use what you have available in the package you are using.