What this calculator does
Portfolio beta measures how sensitive an entire portfolio is to market-wide moves, built up from the beta of each individual holding. A single stock’s beta tells you how it tends to move relative to the market; portfolio beta rolls all of those up into one figure using the weighted average, weighted by each holding’s share of the portfolio.
This is distinct from unlevering a single company’s beta, which strips out that one company’s debt to compare it against peers with different capital structures. Portfolio beta instead combines several already-known betas, each with its own weight, into a single number describing the whole portfolio’s market risk.
The formula
Multiply each holding’s beta by its weight (its share of the total portfolio, by value), add those up, and divide by the sum of the weights. Entering dollar values instead of percentages works just as well, since the weights are normalised by their own total.
| Term | Meaning |
|---|---|
| Portfolio beta | The weighted average of every holding’s beta, weighted by its share of the portfolio. |
| Beta | How much a holding tends to move relative to the overall market; 1 means it moves in line with the market, above 1 means more volatile, below 1 means less. |
| Weight | Each holding’s share of the total portfolio, entered as a percentage or a dollar value in the same order as the betas. |
The inputs explained
| Field | What to enter |
|---|---|
| Beta of each holding (comma separated) | The beta of each holding, separated by commas, in the same order as the weights below. |
| Weight or dollar value of each holding (comma separated, same order) | The weight or dollar value of each holding, in the same order as the betas. Any consistent unit works, since the total is only used as a denominator. |
When to use it
Checking overall portfolio risk
A portfolio beta above 1 means the portfolio, taken as a whole, tends to swing more than the market; below 1 means it tends to be steadier, useful context before deciding whether to add or trim a volatile holding.
Rebalancing toward a target risk level
Testing different weightings shows how shifting money between a high-beta and a low-beta holding moves the overall portfolio beta toward a chosen target.
Comparing two portfolio structures
Running the same set of holdings at different weightings, such as equal-weighted versus market-cap-weighted, shows how much the choice of weighting alone changes the portfolio’s market sensitivity.
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
How portfolio beta shifts as one holding’s weight changes
The same three betas, with the weight of the first holding varied while the other two stay in a fixed 35:25 ratio between themselves.
| Weights (first holding varied) | Portfolio beta |
|---|---|
| 10% in holding 1 | 1.10 |
| 25% in holding 1 | 1.12 |
| 40% in holding 1 | 1.14 |
| 55% in holding 1 | 1.15 |
| 70% in holding 1 | 1.17 |
Questions
How is portfolio beta different from a single stock’s beta?
A single stock’s beta describes that one stock’s sensitivity to the market. Portfolio beta is the weighted average of every holding’s beta, describing the sensitivity of the whole portfolio at once.
Is portfolio beta the same as unlevered beta?
No. Unlevering a beta removes one company’s own debt effects to compare it fairly against peers. Portfolio beta instead combines several holdings’ betas, weighted by size, into one figure for the whole portfolio, and does not involve debt at all.
What weighting should I use, percentages or dollar values?
Either works. The calculator only uses the ratio between the weights you enter, so a column of dollar values and a column of percentages that represent the same split will produce the same portfolio beta.
What does a portfolio beta of exactly 1 mean?
It means the portfolio, on average, tends to move in line with the broader market, neither amplifying nor dampening market-wide swings, based on the beta and weighting inputs used.
To unlever a single company’s beta before including it here, see the Unlevered Beta Calculator. Once you have a portfolio beta, the CAPM Calculator uses it to estimate an expected return.