Stock Analysis on Net
Stock Analysis on Net

Oracle Corp. (NYSE:ORCL)

Capital Asset Pricing Model (CAPM) 

Microsoft Excel

Capital asset pricing model (CAPM) indicates what should be the expected or required rate of return on risky assets like Oracle Corp. common stock.

Rates of Return

Oracle Corp., monthly rates of return

Microsoft Excel
Oracle Corp. (ORCL) Standard & Poor’s 500 (S&P 500)
t Date PriceORCL,t1 DividendORCL,t1 RORCL,t2 PriceS&P 500,t RS&P 500,t3
Jun 30, 2019 $56.97 2,941.76
1. Jul 31, 2019 $56.30 $0.24 -0.75% 2,980.38 1.31%
2. Aug 31, 2019 $52.06 -7.53% 2,926.46 -1.81%
3. Sep 30, 2019 $55.03 5.70% 2,976.74 1.72%
. . . . . . .
. . . . . . .
. . . . . . .
70. Apr 30, 2025 $140.72 $0.50 1.01% 5,569.06 -0.76%
71. May 31, 2025 $165.53 17.63% 5,911.69 6.15%
Average (R): 1.99% 1.11%
Standard deviation: 8.55% 4.96%
Oracle Corp. (ORCL) Standard & Poor’s 500 (S&P 500)
t Date PriceORCL,t1 DividendORCL,t1 RORCL,t2 PriceS&P 500,t RS&P 500,t3
Jun 30, 2019 $56.97 2,941.76
1. Jul 31, 2019 $56.30 $0.24 -0.75% 2,980.38 1.31%
2. Aug 31, 2019 $52.06 -7.53% 2,926.46 -1.81%
3. Sep 30, 2019 $55.03 5.70% 2,976.74 1.72%
4. Oct 31, 2019 $54.49 $0.24 -0.55% 3,037.56 2.04%
5. Nov 30, 2019 $56.14 3.03% 3,140.98 3.40%
6. Dec 31, 2019 $52.98 -5.63% 3,230.78 2.86%
7. Jan 31, 2020 $52.45 $0.24 -0.55% 3,225.52 -0.16%
8. Feb 29, 2020 $49.46 -5.70% 2,954.22 -8.41%
9. Mar 31, 2020 $48.33 -2.28% 2,584.59 -12.51%
10. Apr 30, 2020 $52.97 $0.24 10.10% 2,912.43 12.68%
11. May 31, 2020 $53.77 1.51% 3,044.31 4.53%
12. Jun 30, 2020 $55.27 2.79% 3,100.29 1.84%
13. Jul 31, 2020 $55.45 $0.24 0.76% 3,271.12 5.51%
14. Aug 31, 2020 $57.22 3.19% 3,500.31 7.01%
15. Sep 30, 2020 $59.70 4.33% 3,363.00 -3.92%
16. Oct 31, 2020 $56.11 $0.24 -5.61% 3,269.96 -2.77%
17. Nov 30, 2020 $57.72 2.87% 3,621.63 10.75%
18. Dec 31, 2020 $64.69 12.08% 3,756.07 3.71%
19. Jan 31, 2021 $60.43 $0.24 -6.21% 3,714.24 -1.11%
20. Feb 28, 2021 $64.51 6.75% 3,811.15 2.61%
21. Mar 31, 2021 $70.17 8.77% 3,972.89 4.24%
22. Apr 30, 2021 $75.79 $0.32 8.47% 4,181.17 5.24%
23. May 31, 2021 $78.74 3.89% 4,204.11 0.55%
24. Jun 30, 2021 $77.84 -1.14% 4,297.50 2.22%
25. Jul 31, 2021 $87.14 $0.32 12.36% 4,395.26 2.27%
26. Aug 31, 2021 $89.13 2.28% 4,522.68 2.90%
27. Sep 30, 2021 $87.13 -2.24% 4,307.54 -4.76%
28. Oct 31, 2021 $95.94 $0.32 10.48% 4,605.38 6.91%
29. Nov 30, 2021 $90.74 -5.42% 4,567.00 -0.83%
30. Dec 31, 2021 $87.21 -3.89% 4,766.18 4.36%
31. Jan 31, 2022 $81.16 $0.32 -6.57% 4,515.55 -5.26%
32. Feb 28, 2022 $75.97 -6.39% 4,373.94 -3.14%
33. Mar 31, 2022 $82.73 8.90% 4,530.41 3.58%
34. Apr 30, 2022 $73.40 $0.32 -10.89% 4,131.93 -8.80%
35. May 31, 2022 $71.92 -2.02% 4,132.15 0.01%
36. Jun 30, 2022 $69.87 -2.85% 3,785.38 -8.39%
37. Jul 31, 2022 $77.84 $0.32 11.86% 4,130.29 9.11%
38. Aug 31, 2022 $74.15 -4.74% 3,955.00 -4.24%
39. Sep 30, 2022 $61.07 -17.64% 3,585.62 -9.34%
40. Oct 31, 2022 $78.07 $0.32 28.36% 3,871.98 7.99%
41. Nov 30, 2022 $83.03 6.35% 4,080.11 5.38%
42. Dec 31, 2022 $81.74 -1.55% 3,839.50 -5.90%
43. Jan 31, 2023 $88.46 $0.32 8.61% 4,076.60 6.18%
44. Feb 28, 2023 $87.40 -1.20% 3,970.15 -2.61%
45. Mar 31, 2023 $92.92 6.32% 4,109.31 3.51%
46. Apr 30, 2023 $94.72 $0.40 2.37% 4,169.48 1.46%
47. May 31, 2023 $105.94 11.85% 4,179.83 0.25%
48. Jun 30, 2023 $119.09 12.41% 4,376.86 4.71%
49. Jul 31, 2023 $117.23 $0.40 -1.23% 4,588.96 4.85%
50. Aug 31, 2023 $120.39 2.70% 4,507.66 -1.77%
51. Sep 30, 2023 $105.92 -12.02% 4,288.05 -4.87%
52. Oct 31, 2023 $103.40 $0.40 -2.00% 4,193.80 -2.20%
53. Nov 30, 2023 $116.21 12.39% 4,567.80 8.92%
54. Dec 31, 2023 $105.43 -9.28% 4,769.83 4.42%
55. Jan 31, 2024 $111.70 $0.40 6.33% 4,845.65 1.59%
56. Feb 29, 2024 $111.68 -0.02% 5,096.27 5.17%
57. Mar 31, 2024 $125.61 12.47% 5,254.35 3.10%
58. Apr 30, 2024 $113.75 $0.40 -9.12% 5,035.69 -4.16%
59. May 31, 2024 $117.19 3.02% 5,277.51 4.80%
60. Jun 30, 2024 $141.20 20.49% 5,460.48 3.47%
61. Jul 31, 2024 $139.45 $0.40 -0.96% 5,522.30 1.13%
62. Aug 31, 2024 $141.29 1.32% 5,648.40 2.28%
63. Sep 30, 2024 $170.40 20.60% 5,762.48 2.02%
64. Oct 31, 2024 $167.84 $0.40 -1.27% 5,705.45 -0.99%
65. Nov 30, 2024 $184.84 10.13% 6,032.38 5.73%
66. Dec 31, 2024 $166.64 -9.85% 5,881.63 -2.50%
67. Jan 31, 2025 $170.06 $0.40 2.29% 6,040.53 2.70%
68. Feb 28, 2025 $166.06 -2.35% 5,954.50 -1.42%
69. Mar 31, 2025 $139.81 -15.81% 5,611.85 -5.75%
70. Apr 30, 2025 $140.72 $0.50 1.01% 5,569.06 -0.76%
71. May 31, 2025 $165.53 17.63% 5,911.69 6.15%
Average (R): 1.99% 1.11%
Standard deviation: 8.55% 4.96%

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1 Data in US$ per share of common stock, adjusted for splits and stock dividends.

2 Rate of return on common stock of ORCL during period t

3 Rate of return on S&P 500 (the market portfolio proxy) during period t

Variance and Covariance

Oracle Corp., calculation of variance and covariance of returns

Microsoft Excel
t Date RORCL,t RS&P 500,t (RORCL,t–RORCL)2 (RS&P 500,t–RS&P 500)2 (RORCL,t–RORCL)×(RS&P 500,t–RS&P 500)
1. Jul 31, 2019 -0.75% 1.31% 7.55 0.04 -0.56
2. Aug 31, 2019 -7.53% -1.81% 90.71 8.52 27.80
3. Sep 30, 2019 5.70% 1.72% 13.78 0.37 2.26
. . . . . . .
. . . . . . .
. . . . . . .
70. Apr 30, 2025 1.01% -0.76% 0.97 3.51 1.84
71. May 31, 2025 17.63% 6.15% 244.54 25.43 78.85
Total (Σ): 5,117.06 1,723.53 1,928.90
t Date RORCL,t RS&P 500,t (RORCL,t–RORCL)2 (RS&P 500,t–RS&P 500)2 (RORCL,t–RORCL)×(RS&P 500,t–RS&P 500)
1. Jul 31, 2019 -0.75% 1.31% 7.55 0.04 -0.56
2. Aug 31, 2019 -7.53% -1.81% 90.71 8.52 27.80
3. Sep 30, 2019 5.70% 1.72% 13.78 0.37 2.26
4. Oct 31, 2019 -0.55% 2.04% 6.44 0.87 -2.37
5. Nov 30, 2019 3.03% 3.40% 1.07 5.27 2.38
6. Dec 31, 2019 -5.63% 2.86% 58.09 3.06 -13.33
7. Jan 31, 2020 -0.55% -0.16% 6.45 1.62 3.23
8. Feb 29, 2020 -5.70% -8.41% 59.19 90.65 73.25
9. Mar 31, 2020 -2.28% -12.51% 18.30 185.55 58.27
10. Apr 30, 2020 10.10% 12.68% 65.68 133.97 93.80
11. May 31, 2020 1.51% 4.53% 0.23 11.69 -1.65
12. Jun 30, 2020 2.79% 1.84% 0.63 0.53 0.58
13. Jul 31, 2020 0.76% 5.51% 1.52 19.36 -5.43
14. Aug 31, 2020 3.19% 7.01% 1.44 34.77 7.07
15. Sep 30, 2020 4.33% -3.92% 5.48 25.33 -11.78
16. Oct 31, 2020 -5.61% -2.77% 57.83 15.03 29.48
17. Nov 30, 2020 2.87% 10.75% 0.77 93.02 8.45
18. Dec 31, 2020 12.08% 3.71% 101.66 6.77 26.24
19. Jan 31, 2021 -6.21% -1.11% 67.36 4.94 18.25
20. Feb 28, 2021 6.75% 2.61% 22.64 2.25 7.13
21. Mar 31, 2021 8.77% 4.24% 45.98 9.82 21.25
22. Apr 30, 2021 8.47% 5.24% 41.89 17.08 26.75
23. May 31, 2021 3.89% 0.55% 3.61 0.31 -1.07
24. Jun 30, 2021 -1.14% 2.22% 9.84 1.24 -3.49
25. Jul 31, 2021 12.36% 2.27% 107.45 1.36 12.08
26. Aug 31, 2021 2.28% 2.90% 0.08 3.20 0.52
27. Sep 30, 2021 -2.24% -4.76% 17.95 34.42 24.86
28. Oct 31, 2021 10.48% 6.91% 72.00 33.69 49.25
29. Nov 30, 2021 -5.42% -0.83% 54.96 3.78 14.40
30. Dec 31, 2021 -3.89% 4.36% 34.61 10.57 -19.13
31. Jan 31, 2022 -6.57% -5.26% 73.33 40.55 54.53
32. Feb 28, 2022 -6.39% -3.14% 70.36 18.03 35.61
33. Mar 31, 2022 8.90% 3.58% 47.68 6.09 17.04
34. Apr 30, 2022 -10.89% -8.80% 166.00 98.12 127.62
35. May 31, 2022 -2.02% 0.01% 16.08 1.22 4.43
36. Jun 30, 2022 -2.85% -8.39% 23.46 90.28 46.02
37. Jul 31, 2022 11.86% 9.11% 97.45 64.03 78.99
38. Aug 31, 2022 -4.74% -4.24% 45.34 28.66 36.05
39. Sep 30, 2022 -17.64% -9.34% 385.46 109.19 205.15
40. Oct 31, 2022 28.36% 7.99% 695.26 47.29 181.32
41. Nov 30, 2022 6.35% 5.38% 19.01 18.19 18.60
42. Dec 31, 2022 -1.55% -5.90% 12.58 49.10 24.85
43. Jan 31, 2023 8.61% 6.18% 43.82 25.66 33.53
44. Feb 28, 2023 -1.20% -2.61% 10.19 13.85 11.88
45. Mar 31, 2023 6.32% 3.51% 18.69 5.74 10.35
46. Apr 30, 2023 2.37% 1.46% 0.14 0.13 0.13
47. May 31, 2023 11.85% 0.25% 97.07 0.74 -8.49
48. Jun 30, 2023 12.41% 4.71% 108.57 12.99 37.55
49. Jul 31, 2023 -1.23% 4.85% 10.36 13.96 -12.03
50. Aug 31, 2023 2.70% -1.77% 0.49 8.30 -2.02
51. Sep 30, 2023 -12.02% -4.87% 196.35 35.78 83.82
52. Oct 31, 2023 -2.00% -2.20% 15.96 10.94 13.21
53. Nov 30, 2023 12.39% 8.92% 108.07 60.97 81.17
54. Dec 31, 2023 -9.28% 4.42% 127.00 10.98 -37.34
55. Jan 31, 2024 6.33% 1.59% 18.78 0.23 2.08
56. Feb 29, 2024 -0.02% 5.17% 4.04 16.50 -8.17
57. Mar 31, 2024 12.47% 3.10% 109.83 3.97 20.88
58. Apr 30, 2024 -9.12% -4.16% 123.58 27.79 58.60
59. May 31, 2024 3.02% 4.80% 1.06 13.63 3.81
60. Jun 30, 2024 20.49% 3.47% 342.06 5.56 43.60
61. Jul 31, 2024 -0.96% 1.13% 8.70 0.00 -0.07
62. Aug 31, 2024 1.32% 2.28% 0.45 1.38 -0.79
63. Sep 30, 2024 20.60% 2.02% 346.33 0.83 16.93
64. Oct 31, 2024 -1.27% -0.99% 10.63 4.41 6.85
65. Nov 30, 2024 10.13% 5.73% 66.19 21.35 37.59
66. Dec 31, 2024 -9.85% -2.50% 140.17 13.02 42.73
67. Jan 31, 2025 2.29% 2.70% 0.09 2.53 0.48
68. Feb 28, 2025 -2.35% -1.42% 18.88 6.42 11.01
69. Mar 31, 2025 -15.81% -5.75% 316.86 47.12 122.19
70. Apr 30, 2025 1.01% -0.76% 0.97 3.51 1.84
71. May 31, 2025 17.63% 6.15% 244.54 25.43 78.85
Total (Σ): 5,117.06 1,723.53 1,928.90

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VarianceORCL = Σ(RORCL,t–RORCL)2 ÷ (71 – 1)
= 5,117.06 ÷ (71 – 1)
= 73.10

VarianceS&P 500 = Σ(RS&P 500,t–RS&P 500)2 ÷ (71 – 1)
= 1,723.53 ÷ (71 – 1)
= 24.62

CovarianceORCL, S&P 500 = Σ(RORCL,t–RORCL)×(RS&P 500,t–RS&P 500) ÷ (71 – 1)
= 1,928.90 ÷ (71 – 1)
= 27.56

Systematic Risk (β) Estimation

Microsoft Excel
VarianceORCL 73.10
VarianceS&P 500 24.62
CovarianceORCL, S&P 500 27.56
Correlation coefficientORCL, S&P 5001 0.65
βORCL2 1.12
αORCL3 0.75%

Calculations

1 Correlation coefficientORCL, S&P 500
= CovarianceORCL, S&P 500 ÷ (Standard deviationORCL × Standard deviationS&P 500)
= 27.56 ÷ (8.55% × 4.96%)
= 0.65

2 βORCL
= CovarianceORCL, S&P 500 ÷ VarianceS&P 500
= 27.56 ÷ 24.62
= 1.12

3 αORCL
= AverageORCL – βORCL × AverageS&P 500
= 1.99% – 1.12 × 1.11%
= 0.75%

Expected Rate of Return

Microsoft Excel
Assumptions
Rate of return on LT Treasury Composite1 RF 4.57%
Expected rate of return on market portfolio2 E(RM) 14.89%
Systematic risk (β) of Oracle Corp. common stock βORCL 1.12
 
Expected rate of return on Oracle Corp. common stock3 E(RORCL) 16.12%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 E(RORCL) = RF + βORCL [E(RM) – RF]
= 4.57% + 1.12 [14.89% – 4.57%]
= 16.12%