Portfolio Beta Calculator
Measure your portfolio's systematic risk and volatility relative to market benchmarks
Portfolio Composition
Portfolio Beta Results
Risk Assessment
Portfolio is more volatile than market
Expected Movement
If market gains 10%: +10.2%
If market loses 10%: -10.2%
Normalized Portfolio Breakdown
Portfolio Beta Formula
βₚ = β₁ × ω₁ + β₂ × ω₂ + ... + βₙ × ωₙ
βₚ: Portfolio Beta
βₙ: Beta of the nth stock
ωₙ: Weight (allocation percentage) of the nth stock
Note: Portfolio beta is calculated as the weighted average of individual stock betas, where weights represent the proportion of each stock in the portfolio.
Example Portfolio
Balanced Portfolio Example
Fortinet: β=1.12, ω=50%
Johnson & Johnson: β=0.7, ω=25%
SPY (Market): β=1.0, ω=25%
Calculation
βₚ = 1.12×0.5 + 0.7×0.25 + 1.0×0.25
βₚ = 0.56 + 0.175 + 0.25
βₚ = 0.985
Portfolio is 1.5% less volatile than market
Beta Interpretation
β < 0: Negative Beta
Moves opposite to market
β = 0: No Correlation
Independent of market moves
0 < β < 1: Defensive
Less volatile than market
β = 1: Market Risk
Moves with market exactly
β > 1: Aggressive
More volatile than market
Understanding Portfolio Beta
What is Portfolio Beta?
Portfolio beta measures the systematic risk of your investment portfolio relative to the overall market. It indicates how much your portfolio's value will move in relation to market movements.
Why is it Important?
- •Measures systematic risk that cannot be diversified away
- •Helps in asset allocation and risk management
- •Used in CAPM for expected return calculations
- •Aids in portfolio optimization and diversification
Calculation Method
Portfolio beta is calculated as the weighted average of individual asset betas, where weights represent the proportion of each asset in the portfolio.
Key Considerations
- •Beta coefficients should be calculated using sufficient historical data
- •Portfolio weights must sum to 100% for accurate calculation
- •Beta values change over time and should be updated regularly
- •Consider correlation between assets for complete risk assessment