Question

Explain two ways you can use Excel to calculate a stock’s Beta.

Explain two ways you can use Excel to calculate a stock’s Beta.

0 0
Add a comment Improve this question Transcribed image text
Answer #1

Method 1 - Beta formula

Beta = Covariancei,m / Variancem

Let us say we have two data series : the first is a series containing the returns of the stock, and second is a series containing the returns of the market.

Covariancei,m is the covariance between the stock returns, and the market returns. This is calculated using COVAR function in Excel.

Variancem is the variance of the market returns. This is calculated using VAR function in Excel.

Beta is calculated as Covariancei,m / Variancem. The values of Covariancei,m and Variancem are calculated using the Excel functions discussed above.

Method 2 - Regression

Let us say we have two data series : the first is a series containing the returns of the stock, and second is a series containing the returns of the market.

Beta is the slope of the regression line, with the dependent variable (y) being the stock returns, and the independent variable (x) being the market returns.

The slope of the regression line is calculated using SLOPE function in Excel.

The value of the slope calculated using this function is the beta.

Add a comment
Know the answer?
Add Answer to:
Explain two ways you can use Excel to calculate a stock’s Beta.
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT