How to calculate beta for a portfolio
To calculate the beta of a portfolio, you need to first calculate the beta of each stock in the portfolio. Then you take the weighted average of betas of all stocks to calculate the beta of the portfolio.
Let’s say a portfolio has three stocks A, B and C, with portfolio weights as 10%, 30%, and 60% respectively. The beta of these three stocks is 1.1, 1.3 and 0.8.
The the portfolio beta will be:
Portfolio beta = 1.1*10%+1.3*30%+0.8*60% = 0.98
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