How to Calculate Beta using Covariance and Variance
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6 سال پیش
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This video shows how to
This video shows how to calculate the beta of a stock using the covariance of the stock with the market index.
Beta is equal to:
(1) the covariance of a company's stock returns with the returns of the market index (e.g., the returns of the S&P 500)
divided by
(2) the variance of the returns of the market index.
Covariance / variance = beta
For example, if we are examining monthly stock returns for a company called Fluffy Love and the S&P 500 for the past five years, and we find that the covariance between the returns of Fluffy Love and the returns of the S&P 500 is 0.8, while the variance of the returns of the S&P 500 is 0.4, this means that Fluffy Love has a beta of 2.—
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Beta is equal to:
(1) the covariance of a company's stock returns with the returns of the market index (e.g., the returns of the S&P 500)
divided by
(2) the variance of the returns of the market index.
Covariance / variance = beta
For example, if we are examining monthly stock returns for a company called Fluffy Love and the S&P 500 for the past five years, and we find that the covariance between the returns of Fluffy Love and the returns of the S&P 500 is 0.8, while the variance of the returns of the S&P 500 is 0.4, this means that Fluffy Love has a beta of 2.—
Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education freely available to the world.
—
SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS, PLUS:
• A 23-PAGE GUIDE TO MANAGERIAL ACCOUNTING
• A 44-PAGE GUIDE TO U.S. TAXATION
• A 75-PAGE GUIDE TO FINANCIAL STATEMENT ANALYSIS
• MANY MORE FREE PDF GUIDES AND SPREADSHEETS
* http://eepurl.com/dIaa5z
—
SUPPORT EDSPIRA ON PATREON
*Patreon: prof_mclaughlin
—
GET CERTIFIED IN FINANCIAL STATEMENT ANALYSIS, IFRS 16, AND ASSET-LIABILITY MANAGEMENT
* https://edspira.thinkific.com
—
LISTEN TO THE SCHEME PODCAST
* Apple Podcasts: https://podcasts.apple.com/us/podcast...
* Spotify: https://open.spotify.com/show/4WaNTqV...
* Website: https://www.edspira.com/podcast-2/
—
GET TAX TIPS ON TIKTOK
* TikTok: prof_mclaughlin
—
ACCESS INDEX OF VIDEOS
* https://www.edspira.com/index
—
CONNECT WITH EDSPIRA
* Facebook: Facebook: Edspira
* Instagram: Instagram: edspiradotcom
* LinkedIn: LinkedIn: edspira
—
CONNECT WITH MICHAEL
* Twitter: Twitter: Prof_McLaughlin
* LinkedIn: LinkedIn: prof-michael-mclaughlin
—
ABOUT EDSPIRA AND ITS CREATOR
* https://www.edspira.com/about/
* https://michaelmclaughlin.com
6 سال پیش
در تاریخ 1397/06/04 منتشر شده
است.
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