Python for Finance: Beta and Capital Asset Pricing Model

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In this Guided Project, you will:

Understand the theory and intuition behind the Capital Asset Pricing Model (CAPM)

Calculate Beta and expected returns of securities in python

Perform interactive data visualization using Plotly Express

Clock2 hours
BeginnerBeginner
CloudNo download needed
VideoSplit-screen video
Comment DotsEnglish
LaptopDesktop only

In this project, we will use Python to perform stocks analysis such as calculating stock beta and expected returns using the Capital Asset Pricing Model (CAPM). CAPM is one of the most important models in Finance and it describes the relationship between the expected return and risk of securities. We will analyze the performance of several companies such as Facebook, Netflix, Twitter and AT&T over the past 7 years. This project is crucial for investors who want to properly manage their portfolios, calculate expected returns, risks, visualize datasets, find useful patterns, and gain valuable insights. This project could be practically used for analyzing company stocks, indices or currencies and performance of portfolio. Note: This course works best for learners who are based in the North America region. We’re currently working on providing the same experience in other regions.

Skills you will develop

Financial AnalysisData AnalysisPython ProgrammingData Visualization (DataViz)

Learn step-by-step

In a video that plays in a split-screen with your work area, your instructor will walk you through these steps:

  1. Understand the intuition behind Beta and the Capital Asset Pricing Model (CAPM)

  2. Import datasets, libraries and perform exploratory data analysis

  3. Perform Data Scaling/Normalization

  4. Perform interactive data visualization

  5. Develop a function to calculate daily returns

  6. Calculate beta for individual security

  7. Apply CAPM to individual Security

  8. Calculate Beta for the entire stocks in the portfolio

How Guided Projects work

Your workspace is a cloud desktop right in your browser, no download required

In a split-screen video, your instructor guides you step-by-step

Frequently asked questions

Frequently Asked Questions

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