How to Calculate BETA on Excel - Slope Tool

In today's video, I figured I would show you guys how to calculate beta in excel as well as talk a little more about beta and how you can use it to consider holdings within an account.

So in the video, I will be showing you how to calculate beta using excel and more specifically with the slope tool, as I find the linear regression tool to be more difficult to use. So this video may help in your finance class or in my case assessing the risk of investments I am considering.

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Beta is generally a good way to asses the risk of a stock in comparison to the overall market and you can use that to compare two separate companies with the overall market being the constant. In this example, we found that the 1 year weekly beta of TSLA stock is about 1.3 which means if the S&P 500 goes up 1% then based on past performance Tesla on average went up by 1.3% and if the S&P 500 went down 1% then Tesla on average went down by 1.3%.

So Tesla stock is basically 30% more volatile than the overall market and presents the opportunity to make 30% more, but also lose 30% more compared to the constant which in this case would be the S&P 500. Whereas Phfizers 5Y 1W beta is .65 which means it presents 35% less risk/ reward opportunity compared to the overall market.

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