MarketKit.tools

    Portfolio Beta Calculator

    Understand how your portfolio moves relative to the market. Beta measures your portfolio's sensitivity to benchmark movements. A beta of 1.5 means your portfolio moves 1.5x as much as the market.

    Add your positions with their beta values relative to a benchmark. See portfolio beta, effective market exposure, diversification benefit, and how leverage affects your beta.

    PortfolioAnalysis

    Benchmark asset (e.g., BTC, ETH, market index)

    Positions

    Portfolio Beta

    Relative to BTC

    2.657

    Risk LevelVERY HIGH
    Total Notional$21,000
    Effective Exposure$55,800

    Effective Market Exposure

    Market-adjusted exposure

    $55,800

    Total Notional$21,000
    Beta Multiplier2.657x

    Diversification Benefit

    Risk reduction from diversification

    -10.7%

    Beta Concentration100.0%
    Want to understand this better?Read our portfolio management guide

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    Position Beta Breakdown

    BTC LongETH LongPosition00.751.52.253BetaMarket (1.0)

    Beta for each position (adjusted for leverage). Higher beta = more sensitive to market movements.

    Beta Over Time

    0123456789101112Period00.71.42.12.8BetaMarket (1.0)

    How portfolio beta might change over time (simulated). In reality, beta changes as positions and market conditions change.

    Position Details

    BTC LongWeight: 71.4%
    Notional: $15,000
    Asset Beta: 1.00
    Leverage: 3x
    Position Beta: 3.00
    ETH LongWeight: 28.6%
    Notional: $6,000
    Asset Beta: 0.90
    Leverage: 2x
    Position Beta: 1.80

    How It Works

    Calculation Methodology

    This tool calculates portfolio beta, which measures how much your portfolio moves relative to a benchmark. Beta is calculated as a weighted average of individual position betas, adjusted for leverage.

    Step 1: Calculate Position Notional Values
    notional = position_size × leverage
    total_notional = Σ notional_i
    Step 2: Calculate Position Betas (Adjusted for Leverage)
    position_beta = asset_beta × leverage
    // Leverage multiplies beta — 3x leverage on beta 1.0 asset = position beta 3.0
    Step 3: Calculate Portfolio Beta
    weight_i = notional_i / total_notional
    portfolio_beta = Σ (weight_i × position_beta_i)
    // Weighted average of position betas
    Step 4: Calculate Effective Market Exposure
    effective_exposure = total_notional × portfolio_beta
    // Shows how much market exposure your portfolio represents
    Step 5: Calculate Diversification Benefit
    simple_average_beta = average(position_beta_i)
    diversification_benefit = ((simple_average - portfolio_beta) / simple_average) × 100%
    // Positive benefit means diversification reduces risk
    Examples:
    Position 1: $5k, 3x leverage, beta 1.0 → notional $15k, position beta 3.0
    Position 2: $3k, 2x leverage, beta 0.9 → notional $6k, position beta 1.8
    Total notional: $21k
    Weights: 71.4% (pos1), 28.6% (pos2)
    Portfolio beta: 0.714×3.0 + 0.286×1.8 = 2.57
    Effective exposure: $21k × 2.57 = $54k

    Key Insight: Portfolio beta measures your portfolio's sensitivity to market movements. Beta 1.0 means your portfolio moves with the market. Beta 2.0 means your portfolio moves 2x as much. Leverage multiplies beta — 3x leverage on a beta 1.0 asset gives you beta 3.0. High beta = high risk but also high potential returns. Effective exposure shows your true market exposure after accounting for beta — a $10k portfolio with beta 2.0 behaves like $20k exposed to the market.

    Learn more about portfolio management:

    Portfolio management guide

    Example Scenario

    Setup: BTC long ($5k, 3x leverage, beta 1.0), ETH long ($3k, 2x leverage, beta 0.9)

    Position 1: $15k notional, beta 3.0, weight 71.4%
    Position 2: $6k notional, beta 1.8, weight 28.6%
    Portfolio Beta: 2.57
    Effective Exposure: $54k
    Risk Level: HIGH

    What this means: Your portfolio has beta 2.57, meaning it moves 2.57x as much as the benchmark. If the benchmark moves 10%, your portfolio moves 25.7%. Your $21k notional behaves like $54k exposed to the market. This is high risk — consider reducing leverage or adding lower-beta positions.

    Common Mistakes & Warnings

    • ⚠Ignoring leverage in beta: Leverage multiplies beta. A beta 1.0 asset with 3x leverage has position beta 3.0. Always account for leverage when calculating portfolio beta — it significantly increases risk.
    • ⚠Not knowing asset betas: You need beta values for each asset relative to your benchmark. If unknown, estimate: BTC ~1.0, ETH ~0.8-1.2, altcoins ~1.5-3.0. Use approximate values if exact data isn't available.
    • ⚠High beta without understanding risk: High beta (2.0+) means high volatility. Your portfolio will swing wildly with market movements. Make sure you can handle the volatility before maintaining high-beta portfolios.
    • ⚠Not recalculating when positions change: Beta changes as you add/remove positions or change leverage. Recalculate periodically, especially after significant portfolio changes.

    Example Scenarios

    Try these realistic scenarios to understand portfolio beta with different positions.

    Scenario 1: Low Beta Portfolio

    Conservative portfolio with low market sensitivity.

    Portfolio Beta: ~0.6
    Risk Level: LOW
    Effective Exposure: ~$6k
    Total Notional: $10k

    What this means: Low beta portfolio (0.6) means your portfolio moves 60% as much as the market. If the market moves 10%, your portfolio moves 6%. This is conservative — lower risk but also lower potential returns.

    Scenario 2: High Beta Portfolio

    Aggressive portfolio with high leverage and high market sensitivity.

    Portfolio Beta: ~4.2
    Risk Level: VERY HIGH
    Effective Exposure: ~$84k
    Total Notional: $20k

    What this means: High beta portfolio (4.2) means your portfolio moves 4.2x as much as the market. If the market moves 10%, your portfolio moves 42%. Your $20k notional behaves like $84k exposed to the market. This is extremely risky — small market moves cause large portfolio swings.

    Frequently Asked Questions

    When should I use this tool?

    Use this tool to understand how your portfolio moves relative to a benchmark (like BTC or the overall crypto market). Beta tells you if your portfolio is more or less volatile than the market. A beta of 1.5 means your portfolio moves 1.5x as much as the market — if the market moves 10%, your portfolio moves 15%.

    What is portfolio beta?

    Portfolio beta measures how much your portfolio moves relative to a benchmark. Beta = 1 means your portfolio moves with the market. Beta > 1 means your portfolio is more volatile (amplifies market moves). Beta < 1 means your portfolio is less volatile (dampens market moves). Beta = 0 means your portfolio is uncorrelated with the market.

    How is portfolio beta calculated?

    Portfolio beta = weighted average of individual asset betas. Formula: β_portfolio = Σ (weight_i × β_i). Weight_i = (position_size × leverage) / total_portfolio_notional. For example, if you have 60% in BTC (β=1.2) and 40% in ETH (β=0.8), portfolio beta = 0.6×1.2 + 0.4×0.8 = 1.04.

    What is effective market exposure?

    Effective market exposure is your portfolio's notional value adjusted for beta. If you have $10,000 notional with beta 1.5, your effective exposure is $15,000 — meaning your portfolio behaves as if you have $15,000 exposed to the market. Higher beta = higher effective exposure = more risk.

    What is diversification benefit?

    Diversification benefit measures how much risk reduction you get from holding uncorrelated positions. If all positions have beta 1.0 and are perfectly correlated, diversification benefit is 0%. If positions have different betas or low correlation, diversification benefit is positive — you get less risk than simple sum of positions.

    What's a good portfolio beta?

    It depends on your risk tolerance. Beta 0.5-0.8 is conservative (less volatile than market). Beta 0.8-1.2 is moderate (similar to market). Beta 1.2-2.0 is aggressive (more volatile). Beta > 2.0 is very aggressive. Most balanced portfolios have beta 0.8-1.5. Lower beta = lower risk but also lower potential returns.

    How does leverage affect beta?

    Leverage multiplies beta. If an asset has beta 1.0 and you use 3x leverage, your position beta becomes 3.0. Leverage amplifies both gains and losses relative to the market. High leverage + high beta = very high risk. Always account for leverage when calculating portfolio beta.

    What if I don't know the beta values?

    You can estimate beta from historical data: beta = correlation × (asset_volatility / market_volatility). For crypto, BTC often has beta ~1.0 (it is the market), ETH has beta ~0.8-1.2, altcoins have beta 1.5-3.0. Use approximate values if exact data isn't available — the tool will still show relative risk.

    How does this relate to Correlation Risk Calculator?

    Correlation Risk shows effective exposure when positions are correlated. Portfolio Beta shows sensitivity to market movements. They're related — high correlation often means high beta. Use Correlation Risk to see exposure overlap, Portfolio Beta to see market sensitivity.

    Can beta change over time?

    Yes — beta changes as market conditions, correlations, and your positions change. Recalculate periodically, especially after adding/removing positions or when market conditions shift. Beta is a snapshot, not a constant — it reflects current portfolio composition and market relationships.

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