Transparent concentration methodology
This calculator uses position weights, not price history or volatility. It answers a narrow question: how evenly or unevenly is portfolio weight distributed?
Herfindahl-Hirschman Index
Each weight is expressed as a percentage. A portfolio split equally across 10 holdings has an HHI of 1,000. A single-holding portfolio has an HHI of 10,000. Lower values indicate that weight is spread across more positions; higher values indicate that fewer positions dominate.
Effective number of positions
This converts HHI into an intuitive equivalent. For example, an effective-position count of 4 means the portfolio has roughly the same weight concentration as four equally weighted positions, even if it contains many more tickers.
| Measure | What it captures | Important limitation |
|---|---|---|
| Largest holding | Dependence on the single biggest entered position | Does not reveal exposure hidden inside a fund |
| Top-three share | How much of the portfolio is controlled by its three largest positions | Does not measure correlation between positions |
| HHI | Concentration across every entered weight | Treats labels as distinct unless you combine look-through exposure |
| Effective positions | Equal-weight equivalent of the entered portfolio | It is an interpretation of HHI, not a count of securities |
No universal safe threshold: concentration can be intentional, and an appropriate level depends on objectives, time horizon, liquidity, tax constraints, and risk capacity. The calculator reports structure rather than prescribing an allocation.
Why ETF look-through changes the result
If you enter VOO, QQQ, and an individual technology stock as three separate positions, this calculator measures fund-level concentration. It cannot infer the shared companies inside those funds. Economic concentration may therefore be higher than the result shown.
For a weighted look-through view, use the ETF Portfolio X-Ray. It combines ETF allocation weights with available underlying holdings and keeps unobserved fund weight explicit. Guardfolio's connected portfolio analysis performs aggregation across supported synchronized holdings.
How to read the result
- Compare the number of entered holdings with the effective-position count. A large gap indicates unequal sizing.
- Check whether the largest holding or top three dominate the result.
- Repeat the assessment with sector or asset-class sleeves to examine concentration from another angle.
- For funds, add look-through exposure before treating the result as total economic concentration.
Concentration is only one dimension of portfolio risk. Volatility, correlation, drawdown, liquidity, and allocation drift answer different questions. See the portfolio risk formula for variance-based risk, the rebalancing band calculator for allocation drift against 5/25 thresholds, and the portfolio risk monitor for Guardfolio's full monitoring workflow.
Portfolio concentration questions
What is portfolio concentration?
In short, portfolio concentration describes how much of a portfolio's weight is controlled by a small number of holdings, sectors, assets, or underlying companies.
How do you calculate portfolio concentration?
The calculation squares each percentage weight and adds the results to produce HHI. Largest-holding share, top-three share, and effective positions provide additional interpretations of the same entered weights.
What is an effective number of positions?
The effective number of positions is 10,000 divided by HHI when weights are percentages. It expresses concentration as the number of equally weighted positions that would produce the same HHI.
Does this calculator analyze ETF holdings?
No. This browser calculator analyzes the labels and weights entered. Use fund look-through data to combine repeated underlying companies before interpreting total economic concentration.
Are my portfolio weights uploaded?
No. The calculation runs locally in the browser, and the entered labels, weights, and results are never transmitted. Like other Guardfolio pages, standard site analytics record that the tool was used, not what was entered.
Measure concentration across the whole portfolio
Connect supported accounts or import holdings to examine concentration, ETF overlap, drift, volatility, and drawdown together.
Run the free portfolio risk check