Beta

Calculate the Beta, a measurement that assess the systematic risk of a stock or investment.

Beta is a financial metric used to assess the systematic risk of a stock or investment in relation to the overall market. It provides valuable insights into how a particular asset’s returns tend to move in response to fluctuations in the broader market. A stock’s Beta is calculated by analyzing its historical price movements and their correlation with the movements of a market index, typically the benchmark index like the S&P 500.

The formula is as follows:

For a given period, for example monthly, this translates into the following:

Beta is read against 1, the benchmark’s own beta: above 1 the asset tends to amplify market moves, below 1 to dampen them. Each period’s Beta comes from the daily returns within that period, so a yearly figure rests on about 250 observations and can swing with a single turbulent month; a rolling window (for example period=’monthly’ with rolling=36) gives a steadier estimate for cost of capital work. A Beta close to zero can come from a low correlation with the market rather than from low volatility, so it is worth checking both before calling a stock defensive.

See definition: https://en.wikipedia.org/wiki/Beta_(finance)

Also known as: market sensitivity, systematic risk.

Beta in Python or via the MCP

Install the Finance Toolkit with:

pip install financetoolkit -U

Then call get_beta as shown below.

from financetoolkit import Toolkit

toolkit = Toolkit(
    ["NVDA", "TSLA", "JPM"],
    api_key="FINANCIAL_MODELING_PREP_KEY",
    start_date="2021-01-01",
    end_date="2025-12-31",
)

toolkit.performance.get_beta()

Or, after setting up the Finance Toolkit MCP, ask:

Which returns:

The downside Beta shows how the same stocks moved on the days the S&P 500 fell:

toolkit.performance.get_beta(method="downside")

Parameters

get_beta accepts the following parameters.

Related Factors and Alpha