Custom Beta Three Years Formula in Excel
Understanding Custom Beta Three Years
The Custom Beta Three Years formula in Excel (with MarketXLS) helps you measure a stock’s volatility compared to a benchmark index over a three-year period. By default, it compares against the SPY ETF on a daily basis, but you can also specify a different benchmark and change the frequency to weekly or monthly.
- Purpose: Determine how much a stock moves relative to a benchmark over 3 years.
- Key Benefits:
- Provides insight into risk and volatility
- Helps compare different stocks against a common benchmark
- Useful for portfolio optimization and risk assessment
- When to Use:
- Evaluating long-term volatility trends
- Comparing a stock’s risk with various benchmark indices
- Making data-driven investment decisions
Syntax and Parameters
Use the CustomBetaThreeYears
function to retrieve a three-year beta value. Below is the typical syntax used in Excel:
=CustomBetaThreeYears(Symbol, [symbol_Benchmark], [ReturnPeriod])
Parameter | Description | Required | Example |
---|---|---|---|
Symbol |
The ticker symbol of the stock (e.g., "MSFT"). | Yes | =CustomBetaThreeYears("MSFT") |
symbol_Benchmark |
The benchmark’s ticker symbol. Default is "SPY". | No | =CustomBetaThreeYears("MSFT","AAPL") |
ReturnPeriod |
The frequency of returns. Accepts "daily", "weekly", or "monthly". Default is "daily". | No | =CustomBetaThreeYears("MSFT","SPY","monthly") |
Return Value
- Data Type: Numeric (double) representing the stock’s beta.
- Possible Errors:
- Returns
NA
if an invalid symbol is provided or if there is a connection/license issue.
- Returns
?? Note: Beta calculations rely on historical data. If there is insufficient or no data available, the function may return
NA
.
Examples and Usage
Below are several ways to use the Custom Beta Three Years formula in Excel:
Basic Examples
-
Daily beta against SPY (default benchmark and period):
=CustomBetaThreeYears("MSFT")
This calculates a 3-year daily beta for Microsoft stock against SPY.
-
Daily beta against a different benchmark (e.g., AAPL):
=CustomBetaThreeYears("MSFT", "AAPL")
Frequency Variations
- Weekly Beta:
=CustomBetaThreeYears("MSFT", "AAPL", "weekly")
- Monthly Beta:
=CustomBetaThreeYears("MSFT", "AAPL", "monthly")
Date Input Formats
Although this function automatically calculates data going back 3 years from today, you can provide alternate references or transformations if needed (though it’s not typical for this function):
- Using a cell reference for date:
=CustomBetaThreeYears(A1)
- Using a direct date string:
=CustomBetaThreeYears("2024-03-15")
- Using an Excel date function:
=CustomBetaThreeYears(TEXT(A1,"yyyy-mm-dd"))
Symbol Variations
- Indices:
=CustomBetaThreeYears("^SPX")
- Options:
=CustomBetaThreeYears("@MSFT 110122C00020000")
- Crypto:
=CustomBetaThreeYears("BTCUSD:DEFAULT")
? Pro Tip: For faster calculations on multiple symbols, use proper cell references and array formulas if supported by your version of Excel to batch-process beta calculations.
Common Questions
-
Why am I getting NA?
- An invalid or unsupported symbol could cause
NA
. Ensure the ticker is recognized by MarketXLS. Also verify your MarketXLS license and internet connection.
- An invalid or unsupported symbol could cause
-
Can I compare multiple stocks against multiple benchmarks at once?
- Yes, but you need to enter separate formulas for each pair of stock and benchmark. Consider referencing cells for dynamic comparisons.
-
Does the function automatically adjust for corporate actions (splits, dividends)?
- MarketXLS updates data to reflect adjusted close prices, minimizing data errors.
-
Is the calculation resource-intensive?
- The function makes a web call. For large datasets, performance may be impacted, but typical usage should be seamless in Excel.
-
Which frequency is best?
- Daily data provides shorter-term volatility; weekly or monthly can smooth out noise. Choose based on your timeframe and risk appetite.
?? Note: Always ensure your MarketXLS add-in is up to date for accurate data retrieval.
By understanding and using the Custom Beta Three Years formula in Excel, you can gain valuable insights into a stock’s long-term volatility, enabling you to make more informed investment decisions.