Enter the final Beta value and the initial Beta value into the calculator to determine the Beta Increase. This calculator can also evaluate any of the variables given the others are known.
Beta Increase Formula
The following formula is used to calculate the Beta Increase.
BI = (B1 - B0) / B0
Variables:
- BI is the Beta Increase (%)
- B1 is the final Beta value
- B0 is the initial Beta value
To calculate the Beta Increase, subtract the initial Beta value from the final Beta value. Then, divide the result by the initial Beta value. The result is the Beta Increase, expressed as a percentage.
What is a Beta Increase?
A Beta Increase refers to a rise in the beta coefficient of a stock or portfolio, which indicates a higher level of volatility or risk compared to the overall market. Beta is a measure used in finance to understand the relationship between the price movement of a specific stock or portfolio and the overall market movement. A beta increase suggests that the stock or portfolio is expected to experience larger price fluctuations compared to the market. This could potentially lead to higher returns, but also to higher losses.
How to Calculate Beta Increase?
The following steps outline how to calculate the Beta Increase.
- First, determine the initial Beta value (B0).
- Next, determine the final Beta value (B1).
- Next, use the formula BI = (B1 – B0) / B0 to calculate the Beta Increase.
- Finally, calculate the Beta Increase.
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem :
Use the following variables as an example problem to test your knowledge.
Initial Beta value (B0) = 0.5
Final Beta value (B1) = 0.8
