Beta is a measure of how much a stock's price tends to move relative to a change in the broad market, which is assigned a beta of 1.0 [1]. It is calculated by regressing the stock's periodic returns on the market's returns over a chosen window: beta equals the covariance of the two return series divided by the variance of the market's returns. Using daily closes from DataPorium for the roughly 11 months from September 29, 2025 to August 28, 2026, and the S&P 500 index as the market, Nvidia (NVDA) had a beta of 1.92, Tesla (TSLA) 2.22, Microsoft (MSFT) 0.97 and Apple (AAPL) 0.72 [2][3]. Over that window the S&P 500 rose 15.8%, from 6,661.21 to 7,711.76 [3].
What is beta and how is it calculated?
FINRA describes beta as a measure of how a stock moves relative to the market movement, not the total volatility of a stock; a stock with a beta of 1.2 has historically moved 120 percent for every 100 percent move in a benchmark index such as the S&P 500 [1]. A beta below 1.0 means smaller swings than the index, a beta near 0 means little relation to it, and a negative beta means the stock has tended to move opposite to the market.
The calculation has four steps:
- Collect prices for the stock and the index over the same dates and compute periodic returns (daily, weekly or monthly).
- Compute the covariance between the stock's returns and the index's returns.
- Compute the variance of the index's returns.
- Divide covariance by variance. Equivalently, beta equals the correlation between the two series multiplied by the ratio of the stock's volatility to the market's volatility.
That last identity explains why beta and volatility are different things. A stock can be very volatile but have a modest beta if its swings are not synchronized with the market. Microsoft is a good example below: its annualized volatility was more than double the index's, yet its beta was below 1.0 because its correlation with the S&P 500 was only 0.38 [2][3].
Beta of four large stocks, September 2025 to August 2026
| Stock | Beta vs S&P 500 | Correlation | Annualized volatility | Price change in window |
|---|---|---|---|---|
| Tesla (TSLA) | 2.22 | 0.63 | 46.2% | -21.3% |
| Nvidia (NVDA) | 1.92 | 0.66 | 38.6% | +19.6% |
| Microsoft (MSFT) | 0.97 | 0.38 | 33.5% | -0.2% |
| Apple (AAPL) | 0.72 | 0.38 | 24.8% | +25.7% |
| S&P 500 index | 1.00 | 1.00 | 13.2% | +15.8% |
Calculated from 230 daily returns between September 29, 2025 and August 28, 2026 using DataPorium closing prices and Cboe's S&P 500 index history [2][3]. The window is shorter than the five years many data vendors use, so the figures describe recent behavior rather than long-run averages.
How beta shows up on big market days
Beta is easiest to see when the market moves a lot. On June 5, 2026 the S&P 500 fell 2.6%; Tesla dropped 6.6%, Nvidia 6.2%, Microsoft 2.7% and Apple 1.2% [2][3]. On March 31, 2026 the index rose 2.9%; Nvidia gained 5.6%, Tesla 4.6%, Microsoft 3.1% and Apple 2.9% [2][3]. The high-beta names moved roughly twice as far as the index in both directions, while Apple moved less than the index on the down day. That is what a beta of 2.2 or 0.7 means in practice.
Beta also has limits, and the table shows them. Tesla had the highest beta but the worst return, down 21.3% while the market rose 15.8%; Apple had the lowest beta and the best return [2][3]. Beta describes sensitivity to market moves, not the direction of a stock's own news. The part of a stock's movement not explained by the market (the residual) is company-specific risk, and for single stocks it is usually the larger part. Microsoft's low correlation of 0.38 means most of its daily moves in this period came from its own earnings, product and capital spending news rather than from the market [2].
Window length changes the answer
Beta is not a fixed property. It depends on the period measured, the return frequency and the benchmark. Coca-Cola (KO), for which DataPorium history in this data set begins on April 7, 2026, shows a beta of minus 0.47 and a correlation of minus 0.28 over the 100 trading days to August 28, 2026, while rising 18.1% against the index's 16.5% [2][3]. A negative beta for a consumer staples company over five months does not mean it will hedge a market fall; it means that in that short window its daily moves happened to run against the index. Longer windows and monthly returns give more stable, and usually positive, estimates for such stocks.
How investors use beta
- Portfolio risk budgeting: the beta of a portfolio is the weighted average of its holdings' betas. A portfolio split evenly between Tesla (2.22) and Apple (0.72) has a beta near 1.47 and should be expected to move about 1.5 times as much as the index on market-driven days [2][3].
- Cost of equity: in the capital asset pricing model, expected return equals the risk-free rate plus beta times the equity risk premium. A higher beta raises the discount rate used to value a company's cash flows.
- Screening: low-beta stocks suit investors who want equity exposure with smaller drawdowns; high-beta stocks suit those seeking leverage to a market recovery. DataPorium's stock screener includes beta alongside valuation and dividend filters, and the stock market pages provide the price history to compute custom betas [2].
- Hedging: to hedge $100,000 of a beta-1.9 stock with index futures or an inverse index fund, an investor would size the hedge near $190,000 of index exposure, not $100,000.
- Performance evaluation: alpha is the return left after subtracting beta times the market return. Apple's 25.7% gain with a beta of 0.72 while the market rose 15.8% implies positive alpha of roughly 14 points in this window; Tesla's implies large negative alpha [2][3].
Investors may consider beta as one input among several. It works best for diversified portfolios, where company-specific noise averages out, and least well for a single volatile stock over a short period. It also assumes the past relationship will hold, which fails at exactly the moments hedges matter most.
Beta measures how far a stock tends to move for each 1% move in the market, and from September 2025 to August 2026 Tesla at 2.22 and Nvidia at 1.92 moved about twice as much as the S&P 500 while Apple at 0.72 moved less.
Key takeaways
- Beta is covariance of stock and market returns divided by market variance; the market has a beta of 1.0 [1].
- Over the 11 months to August 28, 2026: Tesla 2.22, Nvidia 1.92, Microsoft 0.97, Apple 0.72 versus the S&P 500 [2][3].
- Beta is not volatility: Microsoft's volatility was 33.5% against 13.2% for the index, but its beta was below 1.0 because its correlation was only 0.38 [2][3].
- Beta estimates change with the window and frequency; short windows can produce odd results such as Coca-Cola's minus 0.47 [2].
- Investors use beta to size hedges, budget portfolio risk, set discount rates and screen stocks.
Frequently asked questions
What does a beta of 1.5 mean?
A stock with a beta of 1.5 has historically moved about 1.5% for every 1% move in the benchmark index, in the same direction. It carries more market risk than the index but also more upside when the market rises [1].
Is a low beta stock safer?
A low beta means smaller reactions to market moves, not lower total risk. A stock can have a low beta and still fall sharply on its own news. Apple's beta of 0.72 in the 11 months to August 2026 came with a 24.8% annualized volatility, well above the index's 13.2% [2][3].
What is Nvidia's beta in 2026?
Using daily returns from September 29, 2025 to August 28, 2026 and the S&P 500 as the benchmark, Nvidia's beta was about 1.92, with a correlation of 0.66 to the index [2][3]. Vendors using five years of monthly data will report a different figure.
Can beta be negative?
Yes. A negative beta means the stock tended to move opposite to the market in the measured period, as Coca-Cola did over the 100 trading days to August 28, 2026 with a beta of minus 0.47 [2]. Such readings are often unstable and window-dependent.
