Portfolio Beta indicates portfolio’s volatility compared with the entire market*. That is, a Beta higher than 1 shows that the portfolio is more volatile than the entire market, while a Beta lower than 1 indicates that the portfolio is less volatile than the entire market.
Beta is a measure of the systematic risk. That is, the portion of total portfolio risk that is due to external factors that affect almost all investments (e.g., wars, recessions, pandemics or even Government’s monetary and economic policies).
Systematic risk cannot be reduced through diversification, as opposed to the unsystematic risk that is investment-specific (business risk) and can be reduced through diversification. Read more here.
You can find the Portfolio Beta value on your dashboard or the Diversiview analysis page, under the ‘Performance & Benchmark‘ section. The table shows two values:
- The left value indicates the portfolio beta of the current asset allocation.
- The right value indicates the portfolio beta of the optimal asset allocation.
*For the purpose of Beta calculations, Diversiview uses the index that you select from your profile settings. To learn how to select your preferred market benchmark, click here.
For more help, visit Diversiview’s YouTube channel and check out our explanatory videos.
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