Discover how to accurately calculate beta in stocks, with comprehensive definitions and examples, empowering you to make the most informed trading decisions ...

One simple but powerful method investors can use to assess the risk and reward of a stock portfolio is using the Capital Asset Pricing Model, or CAPM, model for expected returns.

For example, you can calculate the weighted average beta of the stocks in your portfolio to get a sense of how volatile you can expect your investments to be on a day-to-day basis.

In a previous post, we presented a method for calculating a stock beta and implemented it in Python.

Reviewed by Thomas Brock Fact checked by Suzanne Kvilhaug CAPM: An Overview Many investors use the capital asset pricing model (CAPM) as a way to estimate the potential return of a stock or other ...

The Capital Asset Pricing Model (CAPM) and the Arbitrage Pricing Theory (APT) help project the expected rate of return relative to risk, but they consider different variables.