Beta (β) Calculator

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Beta measures the sensitivity of a stock’s returns relative to the overall market. A beta greater than 1 indicates higher volatility than the market, while a beta less than 1 indicates lower volatility. More info →

Input

Calculation Type

Levered Beta (βL) Enter a value between -1.00 and 3.00.

Unlevered Beta (βU) Enter a value between -1.00 and 2.00.

Source Company

Tax Rate (%)

Debt

Equity

Enter details to calculate beta.

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How This Calculator Works

A company's beta mixes two risks: business risk and the extra risk from its debt. Unlevered beta strips out the debt so you see business risk alone. Levered beta adds the debt back for a given capital structure. The calculator converts between the two using the Hamada formula.

The Formula

β_L = β_U × [1 + (1 − Tax) × (D ÷ E)]

β_L = levered beta · β_U = unlevered beta · D ÷ E = debt-to-equity ratio

What Each Input Does

Calculation Type: Levered → Unlevered – removes the effect of debt from a known beta.
Unlevered → Levered – adds the effect of debt to a business-only beta.
Unlever & Relever – takes a comparable company's beta, unlevers it with its own debt, then relevers it with your target company's debt.
Levered Beta / Unlevered Beta: The beta you start from. Accepted ranges are −1.00 to 3.00 (levered) and −1.00 to 2.00 (unlevered).
Tax Rate (%), Debt, Equity: The capital structure used in the formula. For relevering, a second set is entered for the target company.

Step by Step

The debt-to-equity ratio is debt ÷ equity.
The leverage factor is 1 + (1 − tax rate) × D/E.
To unlever, the beta is divided by the factor. To lever, it is multiplied by it.
For relevering, the unlevered beta is multiplied by the target company's leverage factor.

Reading the Result

β above 1 – moves more than the market.

β = 1 – moves with the market.

β below 1 – moves less than the market.

A warning is shown if a calculated beta falls outside the accepted range.

Quick Example

Levered beta 1.20, tax 25%, debt 50,000, equity 100,000. D/E = 0.5, so the factor is 1 + 0.75 × 0.5 = 1.375 and unlevered beta = 1.20 ÷ 1.375 = 0.87. Relevered for a target with debt 100,000, equity 100,000 and tax 25% (factor 1.75), the levered beta is 1.53.