Calculating Beta

Are you ready to learn about calculating beta? 🤔

💡 Beta is a measure of a stock's volatility compared to the overall market and it's an important tool for investors. 🤑

Beta is calculated by comparing how much a stock's returns move in relation to the overall market's returns. ✍️

Let's look at an example. 🧐

Suppose you're looking at two stocks, stock A and stock B. ⚖️

Let’s say the stock market goes up by 10% 📈

Stock A grows by 12% and Stock B grows by 7% 🤔

In this case, Stock A has a beta of 1.2 and Stock B has a beta of 0.7 🧮

If Stock C grows by 10%, then beta is 1 since it exactly matches with the overall market 📊

Just like Beta’s definition, to calculate beta you compare a stock’s performance to the overall market! 🥳

Knowing how to calculate beta can help you make better investment decisions 🤝

Now you know how to calculate beta by comparing a stock’s performance to the overall market 🧠

In the next lessons, we’ll learn about interpreting Beta 🎉