Alpha and Beta Calculator
Free alpha and beta calculator. Measure your portfolio's market sensitivity (beta) and excess risk-adjusted return (alpha) against a benchmark index.
Beta (Stock) Calculator
Calculate a stock's beta coefficient, alpha, R-squared, and correlation from historical returns. Includes unlevered beta and CAPM expected return.
Historical periodic returns for the stock
S&P 500 or benchmark returns for the same periods
For unlevered beta calculation
Beta (β)⧉
1.335
Systematic risk relative to the market. β=1 means market-level risk.
Alpha (α)⧉
0.760%
Excess return after adjusting for beta risk — positive is outperformance
Correlation⧉
0.997
How closely the stock moves with the market (−1 to +1)
R-Squared⧉
99.4%
Percentage of stock variance explained by market movements
Unlevered Beta⧉
1.335
Beta with the effect of financial leverage removed
Expected Return (CAPM)⧉
12.34%
Rf(3%) + β(1.33) × MRP(7%)
Avg Stock Return⧉
11.10%
Mean return over 10 periods
Avg Market Return⧉
8.50%
Mean benchmark return over 10 periods
Beta Risk Gauge
Low Risk (0)Market (1)High Risk (3+)
Return Pairs
| Period | Stock Return | Market Return | Excess Stock | Excess Market |
|---|---|---|---|---|
| 1 | 12.00% | 10.00% | 0.90% | 1.50% |
| 2 | 8.00% | 6.00% | -3.10% | -2.50% |
| 3 | 15.00% | 12.00% | 3.90% | 3.50% |
| 4 | -5.00% | -4.00% | -16.10% | -12.50% |
| 5 | 20.00% | 15.00% | 8.90% | 6.50% |
| 6 | 10.00% | 8.00% | -1.10% | -0.50% |
| 7 | 18.00% | 13.00% | 6.90% | 4.50% |
| 8 | -3.00% | -2.00% | -14.10% | -10.50% |
| 9 | 14.00% | 11.00% | 2.90% | 2.50% |
| 10 | 22.00% | 16.00% | 10.90% | 7.50% |
Planning notes, formulas, and examples
About the Beta (Stock) Calculator
Beta is one of the most important metrics in finance. It measures a stock's sensitivity to market movements — how much a stock tends to move for every 1% change in the overall market. A beta of 1.0 means the stock moves roughly in lockstep with the market. A beta above 1.0 indicates higher volatility (and potentially higher returns), while a beta below 1.0 suggests lower volatility.
Understanding beta is essential for portfolio construction, risk management, and valuation. Investors use beta to determine expected returns through the Capital Asset Pricing Model (CAPM), assess diversification benefits, and gauge whether individual stocks align with their risk tolerance.
This calculator computes beta from raw return data by performing a covariance/variance regression against a market benchmark. It also calculates alpha (outperformance), correlation, R-squared, and the unlevered beta for companies with debt. The return-pair table and risk gauge visualize the relationship between the stock and the market.
When This Page Helps
Beta is widely quoted but often misunderstood. This calculator lets you compute beta from your own data rather than relying on third-party providers. You can verify reported betas, compare different market windows, and judge whether the relationship is strong enough to support a CAPM assumption through R-squared and correlation.
How to Use the Inputs
- Enter the stock's periodic returns as comma-separated percentages (e.g., monthly or annual returns).
- Enter the market benchmark returns for the same periods.
- Enter the current risk-free rate (e.g., 10-year Treasury yield).
- Enter the market risk premium for CAPM expected return calculation.
- Optionally enter the company's debt-to-equity ratio and tax rate for unlevered beta.
- Review beta, alpha, correlation, and R-squared outputs.
- Use the return pairs table to see how individual periods contributed to the beta estimate.
Formula used
β = Cov(Rₛ, Rₘ) / Var(Rₘ)
α = R̄ₛ − [Rf + β × (R̄ₘ − Rf)]
Unlevered β = β / [1 + (1 − Tax) × D/E]
CAPM Expected Return = Rf + β × Market Risk PremiumExample Calculation
Result: β ≈ 1.22
The stock has a beta of about 1.22, meaning it moves ~22% more than the market. With a risk-free rate of 3% and market premium of 7%, the CAPM expected return is 3% + 1.22 × 7% = 11.54%.
Tips & Best Practices
- Use monthly returns for at least 3-5 years for the most reliable beta estimate.
- Compare the calculated beta with financial data providers to sanity-check.
- Beta can change over time, so consider rolling beta analysis for trending stocks.
- If R-squared is below 0.3, beta has limited predictive power for that stock.
- Use unlevered beta when comparing companies across industries with different leverage levels.
Interpreting Beta
Beta measures how sensitive the stock is to the benchmark you chose. Use the same return frequency and date range for both series so the estimate reflects a real market relationship rather than mismatched inputs.
Reading the Fit
Correlation and R-squared tell you how much of the stock's movement is explained by the market. A stock can have a high beta with a weak R-squared, which means the estimate is noisy even if the slope is large.
When Unlevering Helps
Unlevered beta strips out the effect of debt so you can compare operating risk across companies with different capital structures. That is most useful when you are screening peers or building a valuation assumption for a business with unusual leverage.
Sources & Methodology
Last updated:
Methodology
This calculator estimates beta from matched return series by comparing the security's co-movement with the benchmark. It also derives alpha, correlation, and R-squared from the same historical data and shows an unlevered beta adjustment when debt inputs are provided.
The worksheet is designed for historical comparison and screening. It does not forecast future returns or replace a more complete valuation model.
Sources
- Beta (Investor.gov / U.S. Securities and Exchange Commission)
- Capital Asset Pricing Model (CAPM) (Investor.gov / U.S. Securities and Exchange Commission)
- Standard Deviation (Investor.gov / U.S. Securities and Exchange Commission)
Frequently Asked Questions
A beta of 1 means the stock moves in line with the market. If the market goes up 10%, the stock is expected to go up about 10%.
Neither inherently. High beta means more volatility, which means higher potential returns but also larger drawdowns. It depends on your risk tolerance.
Unlevered beta removes the effect of financial leverage (debt). It reflects the business risk alone, making it useful for comparing companies with different capital structures.
Generally, 30+ monthly returns (2.5 years) give a statistically meaningful beta. Fewer points increase estimation error.
R-squared tells you what percentage of the stock's variance is explained by market movements. A low R-squared means beta is a weak predictor of the stock's behavior.
Yes. A negative beta means the stock tends to move opposite to the market. Gold stocks and some hedge fund strategies sometimes exhibit negative beta.
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