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.

Enter an unlevered (asset) beta from a comparable company; if starting from a levered beta, remove the comparable company's leverage first.
Enter the target debt ratio as D/(D+E) and the corporate tax rate. The calculator converts that debt ratio to D/E for relevering.
Enter the risk-free rate and equity risk premium. Cost of equity = risk-free rate + levered beta × equity risk premium.
Review the levered beta, unlevered beta input, and CAPM cost-of-equity result; this form does not estimate beta from return-history data.

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

Historical 2024 reference ranges

Historical equity beta ranges 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). These are not current company estimates; beta varies by company, period, market index, and leverage.

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.