Custom Beta Five Years Formula in Excel

Custom Beta Five Years is an Excel formula from MarketXLS designed to measure a stock’s long-term relative volatility compared to a benchmark (defaulting to SPY). By evaluating daily, weekly, or monthly returns over a five-year window, this function helps you understand how sensitive a particular stock is to market movements.

Understanding Custom Beta Five Years

• Purpose: Calculate a five-year beta for any security to gauge its risk or volatility relative to a benchmark index.
• Use Cases:
  • Evaluate how much a stock’s price movements deviate from the market over a longer horizon.
  • Compare volatility across multiple stocks or indices under identical conditions.
• Key Benefits:
  • Automatic five-year lookback period (no manual date entry required).
  • Flexible return periods—daily, weekly, or monthly.
  • Quick, reliable insights for portfolio risk analysis.
• When to Use: Utilize this formula whenever you need a long-term risk assessment of a particular stock compared to the broader market or another benchmark.

Syntax and Parameters

Use the CustomBetaFiveYears function directly in your Excel worksheet:

=CustomBetaFiveYears(Symbol, [symbol_Benchmark], [ReturnPeriod])

Return Value

• A numeric value representing the five-year beta of the specified security relative to the chosen benchmark.
• If the function encounters invalid inputs or cannot retrieve data, it returns "NA".

?? Note: This function automatically calculates the start date as five years prior to the current date and the end date as one day before today. There is no need to provide dates.

Examples and Usage

Below are some common ways to use the CustomBetaFiveYears formula in Excel:

1. Basic daily beta example (default benchmark SPY):

   =CustomBetaFiveYears("MSFT")

   This calculates the five-year beta of Microsoft using SPY as the benchmark on a daily return frequency.

2. Comparing a stock against a different benchmark:

   =CustomBetaFiveYears("MSFT", "AAPL")

   Gets the five-year beta of Microsoft compared to Apple’s performance on a daily basis.

3. Specifying monthly return frequency:

   =CustomBetaFiveYears("MSFT", "AAPL", "monthly")

   Calculates Microsoft’s five-year beta versus Apple based on monthly returns.

4. Using indices or crypto as benchmarks:

   • For an index:

     =CustomBetaFiveYears("MSFT", "^SPX")

   • For crypto symbols:

     =CustomBetaFiveYears("MSFT", "BTCUSD:DEFAULT")

? Pro Tip: Use this formula alongside other MarketXLS analytics (e.g., returns, dividends, etc.) for a more comprehensive portfolio view.

Common Questions

1. What if I get "NA"?

   • This typically indicates an invalid symbol or an issue retrieving the data. Check your ticker input and ensure your MarketXLS license is active.

2. How can I change the five-year default period?

   • The CustomBetaFiveYears function is designed for a fixed five-year period. For a different time frame, consider other MarketXLS beta functions or custom queries.

3. What is the difference between using "daily", "weekly", or "monthly" data?

   • "daily" uses the most granular data, capturing short-term volatility. "weekly" and "monthly" smooth out day-to-day fluctuations, providing a broader perspective on price trends.

4. Is there a performance impact for large datasets?

   • MarketXLS manages data efficiently, but retrieving frequent updates for multiple symbols can be resource-intensive. Use appropriate return frequencies and avoid excessive calls for best performance.

5. Does this formula account for dividends?

   • By default, the Beta calculation uses adjusted close prices, which factor in stock splits and dividends. This ensures a more accurate representation of total returns.

For further exploration, check out related MarketXLS functions:

• Total Dividends Paid Between Two Days In The Past
• Stock Return Seven Days
• Stock Return Fifteen Days
• Stock Return Thirty Days

These functions complement the Custom Beta Five Years formula by providing deeper insights into stock performance and returns.