Beta Weighting Your Portfolio

Beta weighting your portfolio gives you a sense of how bullish or bearish your portfolio is positioned. By balancing your portfolio with beta, you can know what types of positions to add to stay neutral.
Beta Weighting Your Portfolio
Kirk Du Plessis
Apr 19, 2021

While we know that individual stock beta is important to judge how responsive a security is to the overall market, being able to beta weight your entire portfolio is a great way to get a sense of how bearish or bullish you might be with your positions. Knowing your portfolio beta weighted deltas also helps with entering new trades because you are able to constantly rebalance your positions adding new trades that help neutralize your deltas.

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In addition to the diversification benefits of having multiple stocks in a portfolio, diversifying across uncorrelated industries and sectors is an important aspect of portfolio management.

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