Calculating the volatility, or beta, of your stock portfolio is probably easier than you think. A beta of 1 means that a portfolio's volatility matches up exactly with the markets. A higher beta indicates great volatility, and a lower beta indicates less volatility. To do it, you'll need to know the percentage of your portfolio by individual stock and the beta for each of those stocks. 

You can learn to calculate beta for individual stocks by clicking here.

The calculation
The first step is to multiply the percentage of your portfolio and the beta for each individual stock. Once that is done, simply add up the results and you'll have your portfolio beta.

This method is a simple weighted average calculation. It's an easy way to quickly assess your entire portfolio's volatility. It only works though if the individual stock's betas are calculated correctly and comparably. Using a six month time period to calculate one stocks beta and a six year period to calculate the other will give you a much different result than using the same time period across the board. Likewise, it's wise to use the same index for each individual stock's beta so that your portfolio beta will have consistency with that index as well. For most portfolios, the S&P 500 is a reasonable index to start with.

It's not required to use the same time period and index for each stock, but it is important to understand how differences in each individual stock's beta will impact the result for your entire portfolio

If you're ready to start building your own portfolio, head over to our online broker tool that helps you choose an investment account.