What is beta in investing?

Beta measures a stock's systematic risk — how sensitive its returns are to movements in the overall market benchmark. A beta of 1.0 means the stock moves in line with the market. Beta above 1.0 means the stock amplifies market moves (aggressive). Beta below 1.0 means the stock is less sensitive than the market (defensive). Beta below 0 means the stock tends to move opposite to the market (inverse or hedge-like). Beta is calculated via OLS regression of stock returns against benchmark returns.

How is beta calculated?

Beta = Covariance(Stock, Market) / Variance(Market) = Σ(rₛ − r̄ₛ)(rₘ − r̄ₘ) / Σ(rₘ − r̄ₘ)². In practice it is computed via OLS (ordinary least squares) regression of the stock's periodic returns (y-axis) against the market's returns (x-axis). The slope of the regression line is beta. The intercept is alpha. R-squared shows how much of the stock's return variation is explained by the market.

What is the CAPM formula?

CAPM (Capital Asset Pricing Model): Expected Return = Rᶠ + β × (Rₘ − Rᶠ), where Rᶠ is the risk-free rate (T-bill yield), β is the stock's beta, and (Rₘ − Rᶠ) is the Equity Risk Premium — the excess return investors demand for holding equities over the risk-free asset. Example: if Rᶠ = 5.25%, β = 1.25, ERP = 5.5%, then Expected Return = 5.25% + 1.25 × 5.5% = 12.125%.

What is unlevered beta and why does it matter?

Unlevered beta (asset beta) strips out the effect of financial leverage from observed (levered) beta, revealing the pure business risk of a company independent of its capital structure. Formula (Hamada equation): βᵤ = β / [1 + (1 − Tax Rate) × D/E]. Unlevered beta is used in valuation to compare companies with different capital structures and to re-lever beta at a new target D/E ratio for WACC calculations.

What is adjusted beta?

Adjusted beta (Vasicek/Blume adjustment) corrects for the empirical tendency of beta to revert toward 1.0 over time. Raw betas estimated from historical data are noisy and tend to be extreme — very high or very low betas usually move toward the market average in subsequent periods. The Blume adjustment: Adjusted Beta = 0.67 × Raw Beta + 0.33 × 1.0. Bloomberg and Refinitiv use this adjustment when reporting beta.

Is this beta calculator free?

Yes. The Beta Calculator Pro on StockToolHub is completely free with no registration, account, or subscription required. All five tabs — Beta Calculator, CAPM, Adjusted Beta, Portfolio Beta, and Compare — are fully accessible.

Beta Calculator Pro — Beta, CAPM, Adjusted Beta, Portfolio Beta & Compare

Asset & Benchmark

Stock / Asset opt

Benchmark opt

Stock Returns (%)

Stock periodic returns (comma-separated)

Enter percentage returns for the same periods as benchmark

Benchmark Returns (%)

Benchmark periodic returns (comma-separated)

Must have the same number of periods as stock returns

Beta (β)

—

Enter stock and benchmark returns to calculate

Alpha (α)

—

R-Squared (R²)

—

Correlation (ρ)

—

Observations

—

Stock Volatility

—

Benchmark Volatility

—

Scatter Plot — Stock vs Benchmark Returns (Regression Line)

Ticker / Asset	Weight (%)	Beta (β)	Weighted Beta	Risk Category

Portfolio Beta

—

Holdings

—

Weight Check

—

Aggressive (β>1)

—

Defensive (β<1)

—

Beta Contribution by Holding

Ticker / Name	Beta (β)	Sector	RF Rate (%)	ERP (%)	CAPM Return	Risk Level	vs Market

Highest Beta Stock

—

Stocks

—

Avg Beta

—

Min Beta

—

Max Beta

—

Beta by Stock with CAPM Expected Return

What each tab calculates

Beta Calculator

Calculates beta via OLS regression of stock returns against benchmark returns. Shows alpha, R-squared, correlation, stock and benchmark volatility, and a scatter plot with regression line. Includes a beta interpretation verdict from Defensive to Very Aggressive.

CAPM

Estimates expected return using the Capital Asset Pricing Model: Rᶠ + β × (Rₘ − Rᶠ). Shows ERP, beta contribution, Jensen's Alpha vs actual return, Treynor ratio, and a Security Market Line (SML) chart plotting expected return against beta.

Adjusted Beta

Applies the Vasicek/Blume mean-reversion adjustment. Unlevered beta using the Hamada equation strips out financial leverage to reveal pure business risk. Re-levered beta applies a new capital structure assumption. Bar chart compares all four beta variants.

Portfolio Beta

Calculates weighted portfolio beta across up to 15 holdings. Each row shows ticker, weight, beta and weighted contribution. Summary shows portfolio beta, aggressive vs defensive holding counts, weight check, and a contribution bar chart.

Compare

Side-by-side comparison of beta, CAPM expected return, and risk classification across up to 8 stocks. Compares each against market beta of 1.0. Shows avg, min and max beta with a dual-axis bar chart of beta and CAPM return.