Capital Assets Pricing Model (CAPM) -- Using Python

The capital asset pricing model (CAPM) is very widely used and is considered to be a very fundamental concept in investing. It determines the link between the risk and expected return of assets, in particular stocks. According to CAPM, the value of α is expected to be zero and that it is very random and cannot be predicted. The equation seen above is in the form of y mx b and therefore it can be treated as a form of linear regression. The scipy package will be used. It has a function to calculate the linear regression.