Please forward this error screen to 209. This Excel spreadsheet calculates the beta of a stock, a widely used risk management tool that describes the risk of a single stock with respect to the risk of the overall market. What Does Beta Mean for Investors? Stocks with how to invest in german stock market beta of above one should have returns greater than the benchmark index, otherwise it is not regarded as a good investment.
If not, other investments should be considered instead. Investments with negative betas have counter cyclical volatility with respect to their benchmark. In an economy that’s decreasing, gold, bankruptcy advisory firms and companies involved in continuing education often have a beta of less than zero. There are, however, significant dissadvantages to beta. Beta does not discrimnate between upwards volatility and downwards volatility. In summary, beta should only be used in conjunction with other tools when you decide what to invest in.
You can get a list of stocks ordered by their beta at Yahoo Finance, but we’ll now describe how you can calculate it in Excel. I’ll pick BP and the FTSE. Then we need historical stock prices for both. I used this spreadsheet for downloading historical stock data from Yahoo to get daily closing prices for BP and the FTSE index between 3rd January 2011 and 1st July 2011. Then we simply calculate the fractional daily returns, as described in the picture below. The corresponding formulae are given below.