Portfolio Beta Calculator

What is portfolio beta?

Beta measures how much an asset or portfolio tends to move relative to the overall market. A beta of 1.0 implies market-like volatility. A beta below 1.0 suggests lower systematic risk. A beta above 1.0 suggests higher sensitivity to market swings. Portfolio beta is the dollar-weighted average of each holding's beta.

Portfolio beta is a core input in the Capital Asset Pricing Model (CAPM). To estimate expected return from beta under CAPM, use the expected return calculator. To compare return per unit of total volatility, use the Sharpe ratio calculator. To estimate beta for a single stock from covariance or CAPM inputs, use the stock beta calculator. To remove leverage from a peer equity beta before comparing business risk, use the unlevered beta calculator. To project long-term portfolio growth with recurring contributions, try the investment calculator. To review your overall asset and liability picture, use the net worth calculator.

Weighted portfolio beta formula

Where $\beta_p$ is portfolio beta, $w_i$ is the weight of asset i (its value divided by total portfolio value), and $\beta_i$ is the beta of asset i relative to the chosen market benchmark.

Worked example

Consider a $100,000 portfolio with three holdings: $40,000 at beta 1.2, $30,000 at beta 0.9, and $30,000 at beta 0.5. Weights are 40%, 30%, and 30%. Portfolio beta equals (0.40 × 1.2) + (0.30 × 0.9) + (0.30 × 0.5) = 0.48 + 0.27 + 0.15 = 0.90. The portfolio is slightly defensive relative to the market.

How to use portfolio beta in practice

• Compare portfolio beta to your risk tolerance before adding aggressive growth stocks.
• Use beta alongside diversification metrics. Low beta does not eliminate unsystematic risk from concentrated positions.
• Recalculate beta after rebalancing because weights change even when individual betas stay constant.

Frequently asked questions