By Marc Lichtenfeld Last week, we received some excellent feedback in response to Monday’s article on calculating a stock’s beta.
So today, I’m going to take this little-known metric one step further by showing you how to manage risk by calculating your portfolio’s overall beta.
You can determine the beta of your portfolio by multiplying the percentage of the portfolio of each individual stock by the stock’s beta and then adding the sum of the stocks’ betas.
For example, imagine that you own four stocks.
You own ADMA Biologics (Nasdaq: ADMA), a small cap biotech with a 2.59 beta, and Cisco Systems (Nasdaq: CSCO), a networking giant …read more
