Q:

How do you calculate beta portfolios?

A:

To calculate a beta portfolio, obtain the beta values for all stocks in the portfolio. Find the percentages that each stock represents of the whole portfolio. Multiply the percentage portfolio of each stock by its beta value.

  1. Get the beta values for each stock in the portfolio

    Access the stock quote sites to obtain beta values for each stock in the portfolio. Fill the quote box with the stock ticker symbol, and hit the ‘get quotes’ button. Click the ‘key statistics’ listed on the left-hand column. The stock’s beta value is listed in the first box in the right column of the next page.

  2. Compute your stock percentages

    Calculate the percentage that each stock represents of the whole portfolio. To do this, divide the dollar values of individual stocks by the total value of the entire portfolio. For instance, if you have 100 shares of stock for a total value of $4,000 and the total portfolio is valued at $20,000, the stock represents 20% of your total portfolio.

  3. Obtain the total beta of your stock portfolio

    After multiplying the portfolio’s percentage for each stock, add up all of the results. The final value is the total beta of your stock portfolio.


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