Portfolio Beta Calculator

Understanding Portfolio Beta

Portfolio beta is a measure of the systematic risk or volatility of an entire investment portfolio relative to the broader market (typically represented by a major index like the S&P 500). A portfolio beta of 1.0 indicates that the portfolio moves in tandem with the market, while a beta greater than 1.0 means the portfolio is more volatile than the market.

How to Calculate Portfolio Beta

The beta of a portfolio is calculated as the weighted average of the individual betas of all assets held within the portfolio:

Where:

• $w_i$ is the weight of asset $i$ (calculated as the dollar value of asset $i$ divided by the total portfolio value).
• $\beta_i$ is the individual beta coefficient of asset $i$.
• $n$ is the total number of assets in the portfolio.

Interpreting Your Portfolio Beta

Analyzing portfolio risk helps investors align their asset allocation with their personal risk tolerance:

• Beta < 1.0: Defensive portfolio with lower market volatility (e.g. utility stocks, consumer staples, healthcare).
• Beta = 1.0: Portfolio moves equally with overall market fluctuations.
• Beta > 1.0: Aggressive portfolio with higher market volatility and sensitivity (e.g. high-growth tech stocks, speculative equities).

You can also evaluate single asset risk using our Stock Beta Calculator or compute expected returns with the CAPM Calculator.