Beta measures how a stock’s price typically moves relative to the overall stock market. You can determine a portfolio’s beta based on the betas of its individual stocks. A portfolio with a higher beta has more risk than one with a lower beta. The beta of the stock market is 1. A portfolio beta of 1 suggests its value moves the same as the stock market. A portfolio beta greater than 1 suggests its value fluctuates more than the stock market. A beta of less than 1 suggests a portfolio is less volatile than the market.

#### Step 1

Multiply the number of shares of each stock in a portfolio by the stock’s price to determine the value of each stock. You can find a stock’s price on any financial website that provides stock information. For example, assume you own 700 shares of stock in ABC Company at $10 per share and 150 shares of stock in XYZ Company at $20 per share. Multiply 700 by $10 to get $7,000. Multiply 150 by $20 to get $3,000.

#### Step 2

Add together the value of each stock in the portfolio to determine the portfolio’s total value. In this example, add $7,000 to $3,000 to get a portfolio value of $10,000.

#### Step 3

Divide the value of each stock by the portfolio’s total value to determine the portion of each stock in the portfolio. In this example, divide $7,000 by $10,000 to get a portion of 0.7 for ABC stock. Divide $3,000 by $10,000 to get a portion of 0.3 for XYZ stock.

#### Step 4

Look up the beta of each stock in your portfolio on any financial website that provides stock information. For example, assume ABC stock has a beta of 1.3 and XYZ stock has a beta of 0.4.

#### Step 5

Multiply the portion of each stock in the portfolio by its beta. In this example, multiply 0.7 by 1.3 to get 0.91. Multiply 0.3 by 0.4 to get 0.12.

#### Step 6

Add together your results to determine the portfolio’s beta. Continuing with the example, add 0.91 to 0.12 to get a portfolio beta of 1.03, which means that the portfolio’s value would move slightly more than, but very close to, the stock market.

#### Warning

- Beta is an estimate based on historical price movements and does not guarantee that a stock or portfolio will behave in any particular way in the future. A portfolio’s value might move in a manner that is inconsistent with its beta.

#### References

#### Resources

#### Photo Credits

- Jupiterimages/Photos.com/Getty Images