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Foliolytic's composite 0–100 score for how spread-out your portfolio actually is.
Diversification Score is Foliolytic's composite score (0–100) measuring how spread-out a portfolio is across uncorrelated holdings. It combines the effective number of holdings (HHI-based), sector concentration, country/region weights, and pairwise correlations into a single number that captures actual diversification — not just ticker count.
Composite of effective N + sector HHI + region HHI + avg pairwise correlationDivScore = weighted average of (effective N, 1 − sector HHI, 1 − region HHI, 1 − avg correlation), scaled to 0–100Counting tickers is not diversification. Owning 10 tech stocks gives you concentrated tech exposure regardless of ticker count. The score weights effective holdings (HHI-adjusted) and adds correlation, sector, and geographic spread.
A diversification score above 80 typically requires 20+ holdings across multiple sectors and at least some non-equity exposure (bonds, gold, REITs). Crypto-only portfolios usually score 30–50 because crypto assets are highly correlated with each other. Single-stock portfolios score below 20.
Portfolio: 100% SPY. Effective N = 1 (single ETF), but the underlying ~500 stocks give moderate sector spread. Diversification Score: roughly 55.
Portfolio: 33% VTI, 33% BND, 33% GLD. Three uncorrelated asset classes. Diversification Score: roughly 85.
Score ranges:
| Score | Verdict |
|---|---|
| 0–30 | Concentrated. Single asset class or sector. |
| 30–55 | Moderate. Diversified within one asset class. |
| 55–75 | Good. Multi-class with some correlation. |
| 75–90 | Strong. Multi-class, multi-region, low correlation. |
| 90+ | Exceptional. Approaching textbook diversification. |
Foliolytic-specific composite of effective holdings (HHI-based), sector concentration, region concentration, and average pairwise correlation. Each component is weighted and scaled to 0–100.
Only marginally. Owning 50 tech stocks does not give you much more diversification than 10 tech stocks. Adding asset classes and uncorrelated holdings matters far more.
A total-market index fund like VT or VTI scores around 60–65 — it diversifies across many stocks but they all share equity beta. Adding bonds, gold, or alternatives is needed for higher scores.
In the diversification section of the metrics panel.
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