Portfolio Beta Calculator

What is Portfolio Beta?

Beta (β) measures how much a stock or portfolio moves relative to the overall market. A portfolio beta of 1.0 means it moves in lockstep with the market. Above 1.0 means it amplifies market moves; below 1.0 is more defensive.

Formula: β_portfolio = Σ (w_i × β_i)

Where:

• w_i = weight of stock i in the portfolio (as a decimal, e.g. 0.40 for 40%)
• β_i = beta of stock i
• Σ = sum across all holdings
• Weights should sum to 100%

Reading the result:

• β < 0: Moves opposite the market (e.g., gold, inverse ETFs)
• β = 0: No correlation with market (e.g., cash, some bonds)
• β = 0.5: Half the market volatility: defensive
• β = 1.0: Matches the market exactly
• β = 1.5: 50% more volatile than the market
• β > 2.0: Very aggressive, high-volatility holding

Where to find beta: Beta is published by most financial sites (Yahoo Finance, Bloomberg, Morningstar). It is typically calculated over 36–60 months of monthly returns vs. the S&P 500. Beta changes over time as a company’s business mix and leverage changes.

Beta and CAPM: The Capital Asset Pricing Model (CAPM) uses beta to estimate expected return: Expected Return = Risk-Free Rate + β × (Market Return - Risk-Free Rate)

A portfolio with β = 1.2 should return 1.2× the market risk premium over the risk-free rate.

Portfolio construction: Conservative investors target portfolio β < 0.8. Aggressive growth investors may accept β > 1.3. Diversification generally reduces portfolio β because low-correlation assets offset each other.