Portfolio Holdings

Asset Weight (%) Beta (β)
Total 100%
Net Weight: 100% | Gross Weight: 100%
Weights sum to 95%. For accurate results, weights should total 100%.
Add up to 10 assets. Negative weights indicate short positions.
Ryan O'Connell, CFA
Calculator by Ryan O'Connell, CFA

Quick Reference

  • β < 1 = Less volatile than market
  • β = 1 = Same volatility as market
  • β > 1 = More volatile than market
  • Weights should sum to 100%

Portfolio Beta Result

Portfolio Beta (βp) 1.07 Average
0 1.0 2.0

Formula Breakdown

βp = Σ(wi × βi)
= (30% × 1.20) + (25% × 0.80) + (20% × 1.50) + (15% × 1.00) + (10% × 0.60)
= 0.36 + 0.20 + 0.30 + 0.15 + 0.06
= 1.07

Interpretation

Your portfolio beta of 1.07 indicates it has similar volatility to the overall market. If the market rises 10%, your portfolio would be expected to rise approximately 10.7%.

Rating Guide

Beta measures systematic (market) risk. These tiers match the individual Beta Calculator.

< 0 Negative Moves opposite to market
0 to < 0.5 Very Low Much less volatile
0.5 to < 0.8 Low Less volatile than market
0.8 to < 1.2 Average Similar to market
1.2 to < 1.5 High More volatile than market
≥ 1.5 Very High Much more volatile

Understanding Portfolio Beta

What is Portfolio Beta?

Portfolio beta measures the systematic risk of your entire portfolio relative to the market. It is calculated as the weighted average of individual asset betas:

βp = Σ(wi × βi)

Where wi is each asset's weight and βi is its individual beta.

Key Insight: Portfolio beta tells you how your entire portfolio is expected to move relative to the market. A beta of 1.2 means if the market rises 10%, your portfolio would be expected to rise 12% on average.

How to Find Individual Betas

You can find stock betas on financial websites:

  • Yahoo Finance: Under "Statistics" tab
  • Google Finance: In stock summary
  • Bloomberg: Professional terminal
  • Your brokerage: Most platforms show beta
Note: Beta values vary depending on the calculation period (typically 2-5 years) and market index used. Different sources may show different betas for the same stock.

Interpreting Portfolio Beta

  • βp < 1: Portfolio is less volatile than the market (defensive)
  • βp = 1: Portfolio moves in line with the market
  • βp > 1: Portfolio is more volatile than the market (aggressive)
  • βp < 0: Portfolio moves opposite to the market (rare, typically hedged)

Managing Portfolio Beta

To adjust your portfolio's systematic risk:

To Reduce Beta:
  • Add low-beta stocks (utilities, staples)
  • Increase cash allocation (β ≈ 0)
  • Add bonds (typically β < 0.5)
  • Reduce high-beta holdings
To Increase Beta:
  • Add high-beta stocks (tech, small caps)
  • Reduce cash allocation
  • Use leveraged ETFs (2x, 3x)
  • Concentrate in growth sectors

Important Limitations

  • Backward-looking: Beta is calculated from historical data and may not predict future behavior
  • Linear assumption: Beta assumes a linear relationship with market returns
  • Changes over time: Company betas can shift as business fundamentals change
  • Only systematic risk: Beta ignores company-specific (unsystematic) risk

Consider using portfolio beta alongside the Beta calculator for individual stocks and CAPM calculator for expected returns.

Frequently Asked Questions

Portfolio beta measures the systematic risk of an entire portfolio relative to the market. It is calculated as the weighted average of individual asset betas, where each asset's beta is multiplied by its weight in the portfolio. A portfolio beta of 1.0 means it moves in line with the market, while higher beta indicates more volatility.

Portfolio beta is calculated using the formula: βp = Σ(wi × βi), where wi is the weight of each asset and βi is its individual beta. For example, if you have 60% in Stock A (beta 1.2) and 40% in Stock B (beta 0.8), portfolio beta = 0.60×1.2 + 0.40×0.8 = 0.72 + 0.32 = 1.04.

The "right" portfolio beta depends on your risk tolerance and investment objectives. Conservative investors typically prefer beta below 1.0 for lower volatility. Aggressive investors seeking higher returns may accept beta above 1.0. A beta of 1.0 provides market-level systematic risk—suitable for investors wanting to match market performance.

You can find stock betas on financial websites like Yahoo Finance (under Statistics), Google Finance, Bloomberg, or your brokerage platform. Beta is typically calculated using 2-5 years of monthly returns against a market index like the S&P 500. Be aware that beta can vary depending on the calculation period and method used.

Yes, portfolio beta can be negative if the portfolio is heavily weighted toward assets with negative betas or includes significant short positions. A negative beta portfolio moves opposite to the market—it would be expected to rise when the market falls. This is rare and typically involves inverse ETFs, gold, or hedging strategies.

To reduce portfolio beta: (1) Increase allocation to low-beta assets like utilities, consumer staples, or bonds; (2) Add cash or Treasury bills (beta ≈ 0); (3) Include assets with negative correlation to the market; (4) Reduce exposure to high-beta sectors like technology or small caps. Diversification helps but doesn't directly reduce beta.
Disclaimer

This calculator is for educational and informational purposes only. Beta is a historical measure based on past data and may not predict future performance. Individual stock betas can vary depending on the data source, calculation period, and benchmark used. Investment decisions should consider multiple factors including your risk tolerance, investment horizon, and financial goals. Always consult with a qualified financial advisor before making investment decisions.

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