DEFINITION of 'Unlevered Beta'
A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta of a company without any debt. Unlevering a beta removes the financial effects from leverage.
The formula to calculate a company's unlevered beta is:
Where:
B_{L }is the firm's beta with leverage.
T_{c} is the corporate tax rate.
D/E is the company's debt/equity ratio.
INVESTOPEDIA EXPLAINS 'Unlevered Beta'
This number provides a measure of how much systematic risk a firm's equity has when compared to the market. Unlevering the beta removes any beneficial effects gained by adding debt to the firm's capital structure. Comparing companies' unlevered betas gives an investor a better idea of how much risk they will be taking on when purchasing a firms' stock.
VIDEO

Systematic Risk
The risk inherent to the entire market or entire market segment. ... 
Beta
A measure of the volatility, or systematic risk, of a security ... 
Debt/Equity Ratio
A measure of a company's financial leverage calculated by dividing ... 
Leverage
1. The use of various financial instruments or borrowed capital, ... 
Rho
The rate at which the price of a derivative changes relative ... 
Capital Structure
A mix of a company's longterm debt, specific shortterm debt, ...

Investing Basics
Beta: Know The Risk
Beta says something about price risk, but how much does it say about fundamental risk factors? Find out here. 
Investing Basics
Beta: Gauging Price Fluctuations
Learn how to properly use this measure that can help you meet your criteria for risk. 
Options & Futures
Getting To Know The "Greeks"
Understanding price influences on options positions requires learning about delta, theta, vega and gamma. 
Options & Futures
Using "The Greeks" To Understand Options
These riskexposure measurements help traders detect how sensitive a specific trade is to price, volatility and time decay. 
Active Trading Fundamentals
What is liquidity risk?
Learn how to distinguish between the two broad types of financial liquidity risk: funding liquidity risk and market liquidity risk. 
Active Trading Fundamentals
What does the gearing ratio say about risk?
Find out why lenders and investors pay close attention to a firm's gearing ratios, and why both too much and too little borrowing can be risky. 
Mutual Funds & ETFs
How do hedge funds determine what assets to own?
Learn about the various types of investments that hedge fund managers use, and explore basic hedge fund management trading strategies. 
Fundamental Analysis
Which leverage ratios are most useful for analyzing manufacturing companies?
See which leverage ratios investors and creditors are likely to use when analyzing the debt burdens for manufacturing companies. 
Fundamental Analysis
How do I unlever beta?
Learn how to calculate the unlevered beta of a company and understand the differences between standard beta versus unlevered beta when evaluating risk. 
Fundamental Analysis
What are the differences between gross profit and EBITDA?
Learn how to distinguish between gross profit and EBITDA figures and where to find the information necessary to calculate each type for a company.