 # Calculating Portfolio Variance

When you are calculating the variance of an equally weighted portfolio of n stocks, you take the variance of the portfolio, and you multiply it by (1- variance/covariance) / 1, and then multiply it by the variance/covariance to get your number. If variance/covariance is beta, why do they use a different symbol in the books? Why isn’t this annotated like beta? Thanks.

covariance/variance is beta only when covariance is cov with market and variance is market variance

OK, I get it, so when you are calculating portfolio variance, you are looking at each stocks’ variance with the portfolio of stocks, not the market, thus you use a different symbol. Thanks.

yes and calculate average cov and variance can’t remember the formula right now

i totally don’t get what you are describing… only thing i know is: Var_p = 1/n * var_mean + (n - 1) / n * cov_mean.

what page number are you seeing this ? is it schweser or cfa? i am working on portfolio management and cannot remember what you are referring. thanks

lxwqh Wrote: ------------------------------------------------------- > i totally don’t get what you are describing… > > only thing i know is: > > Var_p = 1/n * var_mean + (n - 1) / n * cov_mean. Yeah, I believe this is it for an equally weighted portfolio.