Portfolio Beta Calculator
Calculate weighted portfolio beta — see each asset's contribution to total market risk exposure.
Asset Allocations
Portfolio Beta
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weighted market risk
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Move per 10% Market
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Total Allocation
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Risk Profile
Per-Asset Beta Contribution
| Asset | Weight | Beta | Weighted Beta | Contribution |
|---|---|---|---|---|
| Portfolio | — | — |
Calculation Details
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How to use this calculator
Enter up to 4 assets with their allocation weight (as a %) and individual beta. The calculator computes the weighted portfolio beta and shows how much the portfolio is expected to move for a 10% change in the broad market.
A 4-asset portfolio:
- 40% in US equities (beta 1.1)
- 30% in tech stocks (beta 1.6)
- 20% in bonds (beta 0.1)
- 10% in gold (beta −0.1)
Portfolio beta = (40×1.1 + 30×1.6 + 20×0.1 + 10×(−0.1)) / 100 = (44 + 48 + 2 − 1) / 100 = 0.93
For every 10% market move, this portfolio is expected to move about 9.3%. It is slightly less volatile than the market.
The portfolio beta formula
Beta is linear and additive across portfolio weights. This simplicity is one reason beta is so widely used. The portfolio beta is simply the allocation-weighted average of individual asset betas.
What beta predicts (CAPM):
A portfolio with beta 1.3 when the market returns 10% and T-bills yield 4%: Expected return = 4% + 1.3 × (10% − 4%) = 4% + 7.8% = 11.8%
If the portfolio actually returns 15%, it has generated positive alpha (15% − 11.8% = 3.2% excess).
Beta reference table by asset class and sector
| Asset / Sector | Typical Beta Range |
|---|---|
| U.S. large-cap index (S&P 500) | 1.00 |
| Technology (XLK, QQQ) | 1.2–1.7 |
| Consumer Discretionary | 1.0–1.4 |
| Financials | 1.1–1.5 |
| Healthcare | 0.6–0.9 |
| Consumer Staples | 0.4–0.7 |
| Utilities | 0.2–0.5 |
| Real estate / REITs | 0.7–1.2 |
| Energy (oil/gas) | 0.8–1.4 |
| International equities (VXUS) | 0.8–1.0 |
| Investment-grade bonds | 0.0–0.2 |
| Long-duration Treasuries (TLT) | −0.2 to 0.3 |
| Gold (GLD) | −0.1 to 0.2 |
| Cash / money market | 0.0 |
| Inverse S&P 500 ETF | ~−1.0 |
| 2× levered equity ETF | ~2.0 |
These are long-run approximate values. Individual betas change over time and vary by data period used.
How to use beta to build a target-risk portfolio
Goal: Build a portfolio with beta ≤ 0.8 using equity and bonds
Start with 100% U.S. equity (beta 1.0). To reach beta 0.8, add bonds (beta ~0.1):
Let x = equity weight (1-x = bond weight) Target: 1.0x + 0.1(1-x) = 0.8 0.9x = 0.7 x = 77.8% equity, 22.2% bonds
A 78/22 equity/bond split achieves beta ≈ 0.8.
Target beta vs. required bond allocation:
| Target Beta | Required Bond Allocation (bonds at beta 0.1) |
|---|---|
| 0.9 | ~11% |
| 0.8 | ~22% |
| 0.7 | ~33% |
| 0.6 | ~44% |
| 0.5 | ~56% |
Adding international equities (beta ~0.85) is less effective at reducing portfolio beta than adding bonds, but provides diversification across different economic cycles. The two effects are complementary.
How beta and standard deviation measure different types of risk
Beta and standard deviation both measure risk, but differently:
| Metric | What It Measures | When to Use |
|---|---|---|
| Beta | Sensitivity to market movements (systematic risk) | Comparing against the market; CAPM |
| Standard Deviation | Total volatility (systematic + idiosyncratic) | Comparing portfolios on absolute risk basis |
| R-Squared | How much variance is explained by the market | Quality check on beta’s relevance |
A single stock can have low beta but high standard deviation if its movements are mostly company-specific (idiosyncratic) rather than market-correlated. For a diversified portfolio, beta and standard deviation track more closely because idiosyncratic risks cancel out.
For a well-diversified portfolio, beta is the dominant risk measure because diversification has eliminated most idiosyncratic risk. For a concentrated portfolio (fewer than 20 stocks), total standard deviation matters more than beta, because company-specific events drive as much volatility as the market does.
Beta in bull vs. bear markets
High-beta portfolios amplify both gains and losses:
Effect on $100,000 portfolio at different betas:
| Market Return | Beta 0.5 | Beta 1.0 | Beta 1.3 | Beta 1.6 |
|---|---|---|---|---|
| +20% | +$10,000 | +$20,000 | +$26,000 | +$32,000 |
| +10% | +$5,000 | +$10,000 | +$13,000 | +$16,000 |
| 0% | $0 | $0 | $0 | $0 |
| −10% | −$5,000 | −$10,000 | −$13,000 | −$16,000 |
| −30% | −$15,000 | −$30,000 | −$39,000 | −$48,000 |
CAPM-simplified estimates, ignoring alpha
In the 2022 bear market (S&P 500 −19.4%), a portfolio with beta 1.3 lost approximately 25%. During the 2020 COVID recovery (+68% from March 2020 low), the same portfolio gained approximately 88%.
The bottom line
Portfolio beta gives you a single number summarizing your market risk exposure. To manage it:
- Understand your current beta: use this calculator to see where your portfolio sits
- Target a beta that matches your risk tolerance: more aggressive investors accept beta > 1.0; conservative investors prefer < 0.8
- Reduce beta by adding uncorrelated or low-beta assets: bonds, gold, cash
- Recognize that beta is not the whole story: it measures systematic risk; the Sharpe ratio adds the return-per-unit-of-risk dimension
For the expected return given beta, see the Alpha Calculator. For risk-adjusted return analysis, see the Sharpe Ratio Calculator.
Frequently Asked Questions
What is portfolio beta?
Portfolio beta is the weighted average beta of all holdings, representing the portfolio's expected sensitivity to market movements. A beta of 1.2 means the portfolio is expected to gain 12% when the market gains 10%, and lose 12% when it loses 10%.
Where do I find an individual stock's beta?
Beta is widely published on financial sites like Yahoo Finance, Google Finance, Bloomberg, and Morningstar. It is usually the 5-year monthly beta vs. the S&P 500. Beta changes over time as a company's business and leverage change.
What is a beta of 1.0?
A beta of 1.0 means the asset moves in lockstep with the market. The S&P 500 itself has a beta of exactly 1.0 by definition. Large-cap S&P 500 constituents often have betas near 1.0, while technology stocks often have betas of 1.2–1.8.
Can a portfolio have a negative beta?
Yes, if you hold assets with negative beta (gold, inverse ETFs, some defensive sectors). A portfolio with 20% in an inverse S&P 500 ETF (beta −1.0) and 80% in equities averaging beta 1.2 has a portfolio beta of 0.96 − 0.20 = 0.76.
Is lower beta always better?
Not necessarily. Lower beta means lower expected volatility, but also lower expected return in up markets. The right beta depends on your risk tolerance and time horizon. In a bull market, higher-beta portfolios outperform; in a bear market, lower-beta portfolios fall less.
What is the typical beta of different asset classes?
Large-cap US stocks: ~1.0. Small-cap growth: 1.2–1.8. REITs: 0.7–1.3. Investment-grade bonds: 0.0–0.2. Gold: −0.1 to 0.2. Cash: 0.0. Emerging markets: 0.9–1.3. Utilities: 0.4–0.6.
How does beta relate to volatility?
Beta measures only the portion of volatility correlated with the market (systematic risk). It does not capture company-specific risk. A concentrated portfolio of one stock could have low beta but high total volatility from idiosyncratic factors.
What does CAPM say about beta and expected return?
CAPM: Expected Return = Rf + β × (Rm − Rf). Higher beta assets demand higher expected return as compensation for systematic risk. A portfolio with beta 1.3 and a 5% risk-free rate is expected to return 5% + 1.3 × 7% = 14.1% when the market returns 12%.
How do I target a specific portfolio beta?
To target beta B, solve: B = Σ(w_i × β_i). Add or reduce exposure to high/low beta assets. Shifting 10% from a beta-1.5 asset to cash reduces portfolio beta by 1.5 × 10% = 0.15. The calculator lets you quickly test allocation changes.
What is the difference between beta and standard deviation?
Standard deviation measures total volatility. Beta measures only the portion correlated with the market. A diversified portfolio's standard deviation is largely explained by beta. For a single stock, idiosyncratic factors make standard deviation much larger than beta alone suggests.
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