Beta of a Security or Portfolio Calculator

Enter value and click on calculate. Result will be displayed.

b = (R - Rf) / (Rm - Rf)

R = Expected Rate of Return
Rf = Risk Free Interest Rate
Rm = Expected Market Return
b = Stock Beta

Enter your values:
Expected Rate of Return (R): %
Risk Free Interest Rate (Rf):
Expected Market Return (Rm): %
Stock Beta (b):

If you are investing in a company's stock, then the beta allows you to understand if the price of that security has been more or less volatile than the market itself and that is a good thing to understand about a stock you are planning to add to your portfolio. It can also be refered as Capital Asset Pricing Model (CAPM).

The general idea behind the above calculator is that investors need to be compensated in two ways: time value of money and risk. The time value of money is represented by the risk free interest rate (rf) and compensates the investors for placing money in any investment over a period of time. The other half of the formula represents risk and calculates the amount of compensation the investor needs for taking on additional risk. This is calculated by stock beta (b) that compares the returns of the asset to the market over a period of time and to the market premium (Rm-Rf).

A stock beta (b) is used to describe the relationship between the individual stock versus the market. Stock Beta is used to measure the risk of a security versus the market by investors.

The risk free interest rate (Rf) is the interest rate the investor would expect to receive from a risk free investment.

The expected market return is the return the investor would expect to receive from a broad stock market indicator.