How market beta is calculated

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Accepted Answer

Market beta is calculated by comparing the returns of a stock or portfolio to the returns of the overall market.

Market beta measures the sensitivity of a stock or portfolio to market movements.
It is calculated by regressing the returns of the stock or portfolio against the returns of a market index.
The slope of the regression line represents the market beta.
A beta of 1 indicates that the stock or portfolio moves in line with the market.
A beta greater than 1 indicates higher volatility compared to the market.
A beta less than 1 indicates lower volatility compared to the market.
For example, if a stock has a beta of 1.2, it is expected to move 20% more than the market.
Beta can be calculated using statistical software or financial websites that provide beta values.

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