How does Dell calculated their Beta?
How does Dell calculated their Beta? Formulas and data.
Answers
ChaosNantuko answered 5 months ago …
Beta = Covariance of Dell and the SPX divided by the variance of the portfolio.
"To estimate beta, one needs a list of returns for the asset and returns for the index; these returns can be daily, weekly or any period. Next, a plot should be made, with the index returns on the x-axis and the asset returns on the y-axis, in order to check that there are no serious violations of the linear regression model assumptions. The slope of the fitted line from the linear least-squares calculation is the estimated Beta. The y-intercept is the alpha."
-http://en.wikipedia.org/wiki/Beta_(finance)
Note that you should also look at the R squared value, as it determines the strength of the correlation. If the R squared value is less then 0.3, then the beta is a lot less meaningful, whereas if the R squared value is greater then .7, then they are more strongly correlated.
That being said, its MUCH easier to just use yahoo finance. lol
DCR answered 5 days ago …
To simplify the answer of Chaos, a company doesn't calculate it's Beta... it's a mathematical calculation done by a "service."
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