Portfolio beta

Portfolio beta measures the portfolio's systematic sensitivity and is calculated as the sum of each asset's weight multiplied by its beta. Weights normally reflect current market values and sum to one for a simple fully invested long-only portfolio. The formula applies to small and large portfolios, but a small portfolio can still have substantial company-specific risk not captured by beta. Beta is therefore not a measure of total portfolio volatility. Leverage, short positions and changing weights require consistent treatment and can produce values outside a simple weighted range.