See how concentrated your portfolio is, and what that could cost.
Example Result
Your result will appear here
The calculated result will appear here after you press Calculate.
Estimates for planning only; not financial, tax or investment advice. See our Disclaimer.
A list of stocks can look spread out while most of the money sits in one or two names. Enter up to five positions with their values and the return you expect from each. You get each position's weight, the weighted expected return, your effective number of holdings, and the loss if your largest position falls by half.
Enter the current market value of each position.
Enter the return you expect from each one, or leave it blank.
Press Calculate to see the weights, effective holdings and the cost of a fall in the largest position.
By O.E. — Partner, chairman of the board and CEO of a metal products manufacturer for 21 years; the company exports to 45 countries.
Drafted with AI assistance; calculations checked against primary sources and tested with the site's own code. About FlowUtil
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| Position | Value | Weight | Expected return |
|---|---|---|---|
| A | $15,000 | 45.45% | 10% |
| B | $8,000 | 24.24% | 7% |
| C | $5,000 | 15.15% | 12% |
| D | $3,000 | 9.09% | 8% |
| E | $2,000 | 6.06% | 6% |
| Total | $33,000 | 100% | 9.15% |
Weight = position value ÷ total value. Weighted return adds up weight × return for each line. The 9.15% is an average of your own guesses, not a measurement or a forecast.
Counting positions misses the size of each one. Square each weight and add them up to get the Herfindahl-Hirschman Index (HHI):
0.4545² + 0.2424² + 0.1515² + 0.0909² + 0.0606² = 0.300
One divided by that gives the effective number of holdings: 1 ÷ 0.300 = 3.3. The portfolio behaves like 3.3 equal positions, not five.
| Portfolio | Effective holdings |
|---|---|
| 2 equal positions | 2.0 |
| The five above | 3.3 |
| 5 equal positions | 5.0 |
| 20 equal positions | 20.0 |
Concentration matters when something goes wrong. If position A falls 50%, the whole portfolio falls 0.4545 × 50% = 22.73%, or $7,500. With five equal positions, the same fall in one stock costs 10%.
There is no safe number. FINRA says there is "no single formula or percentage that suits all investors". It notes that some experts suggest no more than 10% in one stock, and adds that even this could be too high depending on your goals. Five positions cannot meet that test, because they average 20% each. Holding a broad fund as one of your positions is a different case, since the fund is itself spread out.
This analyzer sees only the size of each position. It cannot tell a bank from a drug maker. Five bank stocks at equal weights show 5.0 effective holdings, and yet a single bad year for banks can hit all five. As FINRA puts it, investments in the same industry, region or type "tend to be highly correlated".
Before you trust the figure, check three things:
Portfolio risk is not a weighted average either. It depends on how the holdings move together, so a weighted return has no matching weighted risk. See the portfolio diversification calculator for the correlation side.
This page measures concentration. To set target weights and work out the trades to reach them, use the portfolio diversification calculator. To size a new position so one loss stays small, use the position size calculator. For the tax on selling a large winner, use the capital gains tax calculator.
If you leave a return blank, that position still counts toward its weight and is left out of the weighted return, and the calculator says so. This is an educational estimate, not investment advice.