Calculate the weighted average beta of a multi-asset portfolio from individual betas and allocation weights, then review each asset's contribution to systematic risk.
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Portfolio Analytics
Portfolio beta measures the weighted average systematic risk of a collection of investments relative to the market. It tells investors how sensitive their combined holdings are to broad market movements.
Beta measures an asset's sensitivity to market movements. A beta of 1.0 means the asset moves in line with the market. Above 1.0 means more volatile; below 1.0 means less volatile.
Portfolio beta is the weighted average of individual asset betas, where weights reflect each asset's share of the total portfolio value.
Sum the product of each asset's weight and beta across all holdings.
Portfolio Beta = Σ (weight_i × beta_i)
Where weight_i is the fraction of the portfolio invested in asset i, and beta_i is the asset's beta relative to the market index.
A portfolio holds 40% Stock A (β = 1.2), 35% Stock B (β = 0.8), and 25% Stock C (β = 1.5). Portfolio Beta = 0.40 × 1.2 + 0.35 × 0.8 + 0.25 × 1.5 = 0.48 + 0.28 + 0.375 = 1.135.
A portfolio beta above 1.0 is more volatile than the market — it amplifies both gains and losses. Below 1.0, the portfolio is more defensive. A beta near zero (e.g. a pure bond portfolio) has minimal systematic equity risk.
Beta only captures systematic (market) risk. It does not measure unsystematic risk, which can be diversified away.
Beta is backward-looking — calculated from historical returns. Future beta may differ. Does not capture non-linear risks, tail risks, or sector concentration.
Frequently asked questions
Yes, for an accurate portfolio beta. If weights sum to less than 100%, the remainder is implicitly in cash (beta = 0). The calculator warns if weights do not sum to 100%.
Yes, if enough assets have negative betas (e.g. inverse ETFs or certain commodities). A negative portfolio beta means the portfolio tends to move opposite to the market.
Most financial data providers (Yahoo Finance, Bloomberg, Reuters) publish beta estimates. Be aware that beta varies depending on the estimation period, frequency, and benchmark index used.
Portfolio managers use beta to control the portfolio's market sensitivity. A defensive strategy targets beta below 1.0; an aggressive growth strategy may target beta above 1.0.
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