Beta from covariance and market variance, or from correlation and volatilities.
Estimate only — not investment advice. Beta is backward-looking and changes with the estimation window, benchmark and frequency.
beta (volatility vs the market)
How to use this tool
Use covariance ÷ variance if you have those statistics, or correlation × volatility ratio if you have correlation and standard deviations.
Type them from the same return series and period — mixing windows gives a meaningless beta.
1 = market-like, above 1 = more volatile, below 1 = calmer, negative = tends to move against the market.
Beta belongs alongside alpha, volatility and fundamentals — never as a buy or sell signal by itself.
Formula & worked example
Worked example: covariance 0.02 and market variance 0.01 give beta = 0.02 ÷ 0.01 = 2.00 — twice as volatile as the market. By the other method, correlation 0.80 × (0.20 ÷ 0.15) = 1.07, a slightly more volatile-than-market stock.
Limitations — read this before you rely on it
Backward-looking estimate, not a prediction. Beta depends on the chosen market index, the return frequency (daily, weekly, monthly) and the estimation window, and it can be unstable. It captures only systematic (market) risk, not company-specific risk, and it says nothing about expected return on its own.
Frequently asked questions
A measure of an asset's volatility relative to the market. It comes from regressing the asset's returns on the market's returns; the slope is beta.
Historically the asset moved about 1.5 times as much as the market — up more in rallies and down more in falls, on average.
Yes — for assets that tend to move against the market, such as some gold miners or inverse funds. Negative-beta assets can diversify a portfolio.
Not necessarily. It means higher systematic risk and, in theory, higher expected return — but also bigger swings. It depends on your risk tolerance.
Because they use different market indexes, frequencies and time windows. Always compare betas computed the same way.