Beta Calculator | Examined Content

Beta measures systematic risk vs market. β=1 moves with market, β>1 more volatile, β<1 less. Calculated via regression.

The Formula

β = Cov(Ri, Rm) / Var(Rm)
β = Σ(Ri - R̄)(Rm - R̄) / Σ(Rm - R̄)²

How It Works

// Calculate Beta from return series
function calculateBeta(stockReturns, marketReturns) {
    const n = stockReturns.length;
    
    // Calculate means
    const stockMean = stockReturns.reduce((a,b)=>a+b,0) / n;
    const marketMean = marketReturns.reduce((a,b)=>a+b,0) / n;
    
    // Calculate covariance and variance
    let covariance = 0;
    let marketVariance = 0;
    
    for (let i = 0; i < n; i++) {
        covariance += (stockReturns[i] - stockMean) * 
                      (marketReturns[i] - marketMean);
        marketVariance += (marketReturns[i] - marketMean) ** 2;
    }
    
    return covariance / marketVariance;
}