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How much you move when the market moves.
Beta measures how much a portfolio moves relative to the broader market. A beta of 1.0 means the portfolio matches market moves exactly; 1.5 means it amplifies them by 50%; 0.5 means it moves half as much. Beta is calculated by regressing portfolio returns on market returns — it is the slope of that regression line.
β = Cov(Rp, Rm) / Var(Rm)β = Cov(Rp, Rm) / Var(Rm)Beta is just the slope coefficient from regressing your portfolio's daily returns against the market's daily returns. The intercept of that regression is alpha.
Beta tells you how much market exposure you are running. A high-beta portfolio will outperform in bull markets and underperform in bear markets — both by larger margins than the index. Cash and bonds reduce portfolio beta; leverage and growth stocks raise it.
Beta only captures linear sensitivity to market moves. It does not capture tail risk (use kurtosis), nor the explanatory power of the relationship (use R-squared).
Over the past year, the S&P 500 moved an average of 0.04% per day with variance 0.0001. Your portfolio moved 0.06% per day with covariance to the S&P 500 of 0.00013.
Beta = 0.00013 / 0.0001 = 1.30
Your portfolio is 30% more volatile than the market on average. In a 20% S&P up year, you would expect roughly 26% return; in a 20% down year, roughly −26%.
Beta in itself is not "good" or "bad" — it indicates your risk profile:
| Beta | Interpretation |
|---|---|
| < 0 | Negatively correlated — rare; gold sometimes, short positions, inverse ETFs. |
| 0 – 0.5 | Defensive: bonds, cash, utilities, consumer staples. |
| 0.5 – 0.9 | Below-market sensitivity. Conservative allocations. |
| 0.9 – 1.1 | Roughly market-tracking. Most index funds. |
| 1.1 – 1.5 | Above-market sensitivity. Growth-tilted equity portfolios. |
| 1.5 – 2.0 | Aggressive. Concentrated tech, leveraged ETFs. |
| > 2.0 | Highly leveraged or concentrated. Expect big swings either way. |
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Open the Portfolio Beta Calculator →Depends on your risk tolerance. Beta of 1.0 matches the market; below 1.0 is defensive; above 1.0 is aggressive. There is no universally "good" beta.
Daily portfolio returns regressed on daily S&P 500 total returns over a 1-year rolling window. We also report 3-year and full-history beta.
Because your holdings change and individual stock betas drift. See Beta Drift for the phenomenon.
Yes — for assets that move inversely to the market (gold sometimes, short positions, inverse ETFs). Negative beta is rare for diversified equity portfolios.
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