Portfolio Beta Calculation: Example with Stock Weights and Betas

To calculate the portfolio beta, we need to multiply the beta of each stock by its percentage in the portfolio and then add up the results:

Portfolio beta = (0.25 x 0.75) + (0.20 x 1.24) + (0.15 x 1.09) + (0.40 x 1.42) Portfolio beta = 0.1875 + 0.248 + 0.1635 + 0.568 Portfolio beta = 1.167

Therefore, the portfolio beta is 1.167.