Beta Coefficient | Calculate Beta in Excel

Description
The beta coefficient formula is a financial metric that measures the likelihood of whether a stock/security will change in relation to the movement in market price. The Beta of the stock/security is also used for measuring the systematic risks linked with the specific investment.

Beta is the extent of the change in the outcome variable for every 1 unit change in the predictor variable. A standardised beta compares the strength of the effect of each individual independent variable to the dependent variable. The bigger the absolute value of the beta coefficient, the stronger the impact will be.

Beta formula is used in CAPM model to calculate the Cost of Equity:

Cost of Equity = Risk Free Rate + Beta x Risk Premium

This tool comes with a Beta Calculation Worksheet that you can edit and use yourself, alongside a step-by-step methodology on how to calculate Beta in Excel.