Beta

• 1). Find the beta of each stock in your portfolio. This information is available through stock tracking sources like Bloomberg, Reuters or even on Google Finance by searching for the stock by name. A stock's beta is how the stock reacts to the overall market. If the stock's price experiences movement greater than the overall market, it will have a beta of over 1. If it moves less, its beta will be below 1. Stocks with betas over 1 can are expected to experience greater reward as well as greater risk.
  
  
• 2). Multiple the beta by the percentage the stock represents in your portfolio.
  
  For example: If a stock with a beta of 0.6 represents 10 percent of your portfolio will have a weighted beta of 0.06 (0.6 x 10%).
  
  
• 3). Add the weighted beta of each stock in the portfolio to find the overall beta of your portfolio.
  
  

Rate of Return

• 1). Add up the return for each of the stocks in your portfolio. Rate of return, or ROR, is the ratio of money invested against the money earned, essentially the rate of profit.
  
  
• 2). Divide the total rate of return by the number of stocks in the portfolio. This is will provide the average ROR of the overall portfolio.
  
  
• 3). Compare the ROR of your stock with that of a risk-free investment. Risk-free investments are those that are not affected by the stock market, such as a government bounds or certificate of deposit. A higher rate of return for a stock portfolio means there is greater profit coming from the market than from the interest rate gained from risk-free investments.
  
  

Treynor Ratio

• 1). Place the three numbers from above in the Treynor equation (average rate of return, average return of risk-free rate and portfolio beta).
  
  For example: If a portfolio's average rate of return is 8, average risk-free return is 3, and beta is 1.3. the equation will be (8 - 3) / 1.3.
  
  
• 2). Subtract average risk-free return from average rate of return.
  
  For example: 8 - 3 = 5.
  
  
• 3). Divide resulting number by beta.
  
  For example: 5 / 1.3 = 3.846 (approximated).
  
  
• 4). Evaluate your portfolio's Treynor ratio with those of other portfolios. The higher the number, the greater the chance of reward and risk of loss.