Beta Calculator

Beta Calculator: calculate beta for your business. Formula, benchmarks, and practical tips included.

Beta (β) measures the systematic risk of a stock or portfolio relative to the overall market — it captures how sensitive the asset's returns are to market movements. A beta of 1.0 means the stock moves in line with the market; beta 1.5 means it moves 50% more than the market (higher risk and return potential); beta 0.5 means it moves half as much (lower risk). Beta is the key input in the CAPM cost of equity calculation and reflects a stock's non-diversifiable (systematic) risk. Profit Margin Calculator is where beta feeds into the full cost of equity and WACC.

Historical beta: regress the stock's periodic returns against the market index returns over 3–5 years using weekly or monthly data.
Beta = Covariance(stock returns, market returns) ÷ Variance(market returns).
Unlevered beta (asset beta): strips out the effect of financial leverage — useful for comparing businesses with different capital structures.
Re-lever beta for the target company's capital structure: levered beta = unlevered beta × (1 + (1 − tax rate) × D/E).

Beta formula

Beta = Cov(Rstock, Rmarket) ÷ Var(Rmarket)

Unlevered beta = Levered beta ÷ (1 + (1 − tax rate) × D/E)

Re-levered beta = Unlevered beta × (1 + (1 − tax rate) × D/E)

Worked example: Comparable company levered beta 1.4. Debt/equity ratio 0.6. Tax rate 25%. Unlevered beta = 1.4 / (1 + 0.75 × 0.6) = 1.4/1.45 = 0.97. Re-lever at target company D/E 0.3: levered beta = 0.97 × (1 + 0.75 × 0.3) = 1.19.

Beta benchmarks by sector

Typical beta ranges

Typical equity betas by sector (Damodaran, 2024): utilities 0.4–0.7 (stable regulated cash flows); consumer staples 0.5–0.7; healthcare 0.7–1.0; industrials 0.9–1.2; technology hardware 1.1–1.4; software/SaaS 1.1–1.5; semiconductors 1.4–1.8; biotechnology/clinical stage 1.5–2.0+; financial services 0.8–1.3 (depends on leverage). Betas above 1.5 typically reflect either high operating leverage, high financial leverage, or high growth uncertainty.

Business tips and best practices

Use industry or sector beta (unlevered) rather than company-specific beta for private company valuations — small-sample historical betas are statistically unreliable.
Adjust for mean reversion — raw historical betas tend to revert toward 1.0 over time; Blume adjustment (adjusted beta = 0.67 × raw beta + 0.33) corrects for this.
For acquisitions, use the target company's unlevered beta re-levered at the post-acquisition capital structure — this reflects the risk of the acquisition as financed, not as historically structured.

See formula and results sections for key figures and benchmarks.

Common mistakes to avoid

See tips section for common pitfalls to avoid.

Beta estimates used in regulated proceedings or fairness opinions are subject to expert review and must be supportable. For public companies, beta data is available from major financial data providers. For private companies, comparable company analysis is required. This calculator is for educational purposes only.