Portfolio Diversification Calculator
How concentrated are you, really?
Enter your largest holdings to see their weights, the effective number of holdings and whether any position is above the limit you set.
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- Runs in your browser
- Shareable results
- Educational only
Your holdings.
Leave at 0 if unused.
Leave at 0 if unused.
Any holding above this is flagged.
Holdings with similar exposures are not truly independent, so this is a first check only. These are hypothetical assumptions for learning, not forecasts or expected results for any investment.
Result
Weight of each holding.
View the detailed table
What the numbers mean.
Concentration is risk.
A portfolio dominated by one or two positions can be badly hurt if they fall, whatever the others do.
Effective number of holdings.
This measure shows how many equal positions your portfolio acts like. Ten holdings with one giant position may behave like only two or three.
Own different things.
True diversification needs holdings that do not move together, such as different asset classes, regions and sectors. Weight alone does not show that.
About this portfolio diversification calculator.
A portfolio diversification calculator measures how concentrated your portfolio is. Enter the value of up to six holdings and the maximum weight you are comfortable with for any one position. The calculator shows each holding’s weight, your top three share, the effective number of holdings and how many positions are above your limit.
The effective number of holdings tells you how many equally sized positions your portfolio behaves like, which is more useful than a plain count. Our guide to building an ETF portfolio shows ways to spread risk, and the glossary entry on diversification gives the definition. To see your mix by asset class, use the portfolio allocation calculator.
How the portfolio diversification calculator works in practice.
You hold six positions worth $30,000, $20,000, $15,000, $10,000, $5,000 and $2,000, a total of $82,000, and you set a 20% limit.
Top three holdings: 79.27%
Effective number of holdings: 4.07 (out of 6)
Holdings above your 20% limit: 2
Concentration index (HHI): 2,460
Equal-weight share: 16.67%
Six holdings behave like about four equal ones. The same six positions evenly spread would give an effective number of 6.00 and an index of 1,667. A portfolio with one position at 77.78% and four small ones scores 1.61, however many small holdings sit beside it.
How to choose your inputs.
Holding values. Enter the current market value of each position, largest first. Leave unused rows at 0.
Maximum weight. Your own limit for any one position, as a percentage. The calculator counts how many holdings are above it.
How the portfolio diversification calculator works.
The calculator turns your values into weights, squares and sums them to get a concentration index, and then inverts it to find the effective number of holdings.
Concentration index = Σ (weight)² × 10,000
Effective holdings = 1 ÷ Σ (weight)²
This measures concentration only. It cannot see overlap between funds, correlation, sectors or countries.
Limits of this portfolio diversification calculator.
The calculator measures concentration by value only. It does not know what each holding owns, so two funds can overlap heavily, and it ignores correlations, sectors, countries and currencies. A spread of many holdings is not the same as low risk. Enter the underlying exposure if you want a truer picture.
Common questions about the portfolio diversification calculator.
How many holdings do I need?
There is no fixed number. Broad funds can provide wide diversification with a single holding, while a portfolio of many similar stocks may not.
What limit should I set?
Many investors cap any single stock at a modest share of the portfolio. Choose what fits your risk tolerance.
Do funds count as one holding?
Yes here, but a broad fund already contains many securities. Check what your funds hold.
Does this measure overlap between ETFs?
No. Two ETFs can hold many of the same companies, which reduces real diversification.
What is the effective number of holdings?
It is the number of equally sized positions that would give the same concentration as your portfolio. It equals 1 divided by the sum of each holding’s squared weight.
How many stocks do I need to be diversified?
There is no exact number. Spreading across more holdings reduces the risk of any single one, with smaller benefits as you add more, and a broad fund can provide wide spread in one holding.
What is a good maximum position size?
It depends on your goals and how much risk you can tolerate. Many investors set a limit per position; the calculator shows which holdings go above yours.
What is the concentration index (HHI)?
The Herfindahl-Hirschman Index adds up the squares of each weight, on a scale of 0 to 10,000. A higher number means a more concentrated portfolio.
More calculators.
Educational illustration only, not personal investment advice. Weight-based measures cannot capture correlation or fund overlap.
Further learning: How to build an ETF portfolio · Glossary: Diversification · Portfolio Allocation Calculator · Investor.gov: Financial tools and calculators · Research methodology · Financial disclaimer