# Equity Beta Calculator

**Introduction**

Equity Beta is a crucial financial metric that measures a stock’s sensitivity to market movements. Understanding Equity Beta is essential for investors seeking to assess and manage their portfolio risk. In this article, we’ll introduce an Equity Beta Calculator through HTML and JavaScript, allowing users to efficiently compute this valuable metric.

**How to Use**

To utilize the Equity Beta Calculator, follow these simple steps:

- Enter the values for the market return, risk-free rate, and stock return.
- Click the “Calculate” button to initiate the computation.
- Instantly obtain the Equity Beta result.

This user-friendly calculator streamlines the process of determining Equity Beta, providing a quick and accurate solution for investors.

**Formula**

The Equity Beta calculation involves the following formula:

This formula represents the covariance of stock returns with market returns divided by the variance of market returns.

**Example**

Let’s consider an example where the covariance between stock returns and market returns is 0.005, and the variance of market returns is 0.002. Applying these values to the formula, the Equity Beta can be computed as follows:

**FAQs**

**What is Equity Beta?**

Equity Beta measures a stock’s sensitivity to market movements, helping investors assess the stock’s risk relative to the overall market.

**Why is Equity Beta important?**

Equity Beta aids investors in understanding how a stock may perform in various market conditions, influencing investment decisions.

**How can I interpret Equity Beta?**

An Equity Beta of 1 indicates that the stock’s price tends to move with the market. A beta greater than 1 signifies higher volatility, while less than 1 implies lower volatility compared to the market.

**Conclusion**

Utilizing the Equity Beta Calculator simplifies the process of evaluating a stock’s risk. By inputting relevant market and stock data, investors can swiftly obtain the Equity Beta, enabling informed decision-making in portfolio management.