You've learned how to use Beta to assess the past volatility of a stock 📈

But did you know you can also use Beta to measure the volatility of a whole portfolio? 🦺

To find your portfolio's Beta, just add up the Betas of each stock you own, multiplied by how much of your portfolio the stock makes up 🤌

For example, let's say you own $100 of Apple stock and $100 of Tesla stock 🚗

As of April 2024, Apple's Beta is 1.28 and Tesla's Beta is 2.44 -- both pretty high!

To find your portfolio's Beta, you'd just take 1.28 times 0.5 (since Apple is half of your portfolio) and add it to 2.44 times 0.5 (since Tesla is also half your portfolio) 🤓

1.28 x 0.5 + 2.44 x 0.5 = 1.86

If your portfolio has a beta of 1, it's as volatile as the market 🤔

And if your portfolio has a beta of 0.5, it's half as volatile as the market 🤔

With a Portfolio Beta of 1.86, your portfolio is 86% more volatile than the market!

So if you're into roller coaster rides with your stocks, this might be a good fit, but if not, you might consider changing your strategy!