Portfolio Temperature Calculator
Analyze portfolio concentration risk for free with our Portfolio Temperature Calculator. Interactive heat maps reveal sector, country, and currency exposure at a glance.
Add holdings to see concentration analysis.
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How It Works
Portfolio Temperature visualizes concentration risk across sectors, countries, and currencies using heat maps and Herfindahl Hirschman Index scores. Enter each holding with name, allocation percentage, sector label, country code, currency, and a risk rating from one to ten consistent within each asset class. The tool aggregates exposure along three tabs: sectors, countries, and currencies. Each dimension receives color bands from green through red and an HHI concentration score. Example: five US technology stocks each at eight percent allocation produce forty percent technology sector exposure flagged orange, while five stocks across five sectors at eight percent each stay green. ETF heavy portfolios should list each fund separately even when underlying sectors overlap because fund level labels hide issuer concentration. Assign bond fund ratings relative to bonds and equity ratings relative to equities so cross asset temperature reflects your actual risk appetite.
The heat map grid shows sector country intersections: each cell displays portfolio percentage in a given sector within a given country. Darker cells reveal overlapping risks such as US Technology dominating both sector and geography tabs. Concentration flags fire when a single position exceeds twenty percent, a sector exceeds forty percent, or a country exceeds fifty percent. HHI above twenty five hundred on sectors or thirty six hundred on countries signals elevated concentration versus diversified benchmarks. Run analysis after major market moves or quarterly rebalancing because a portfolio diversified six months ago may drift when one sector rallies sharply. Compare your HHI against benchmark indices: S&P 500 sector HHI is roughly eighteen hundred while equal weight approaches one thousand. Pair with Portfolio Rebalancer to trim overweight sleeves and Asset Correlation Matrix to see whether concentrated holdings move together during stress.
Concentration builds silently as outperforming holdings grow their weight. Schedule a Portfolio Temperature health check after each quarterly earnings season or whenever a single stock doubles in value. The tool answers one question quickly: am I still diversified or has the portfolio drifted into a concentrated bet.
Use Portfolio Temperature whenever inputs change: after market moves, new contributions, or revised personal assumptions. Bookmark the page for quick reruns without installing software.
Step by step
- Open Portfolio Temperature and enter your current inputs.
- Review calculated outputs and summary tables.
- Adjust assumptions and compare scenarios side by side.
Worked example
Portfolio Temperature visualizes concentration risk across sectors, countries, and currencies using heat maps and Herfindahl Hirschman Index scores. Enter the sample inputs described in How it works to reproduce the scenario step by step.
Adjust one input at a time to see sensitivity. Portfolio Temperature updates instantly so you can stress test optimistic and conservative assumptions before acting.
When to use this calculator
Reach for Portfolio Temperature when visualize portfolio concentration risk with a heat map of sector, country, and currency exposure.. It suits quick what if analysis before trades, allocation changes, or plan updates.
Pair with related tools when the decision spans taxes, liquidity, or multi year projections beyond what one formula captures.
Common mistakes
Copying outputs without checking input units or stale market prices is a frequent error with Portfolio Temperature. Confirm tickers, percentages, and dates before acting.
Running a single baseline scenario ignores tail risks. Stress test with conservative inputs and compare against related tools listed below when the decision is material.
The Formula
Temperature Score = Σ(wi × ri) / Σ(wi)
where wi = allocation weight, ri = risk rating (1-10)
Conservative: 1-3
Moderate: 4-6
Aggressive: 7-10
Concentration Risk = max(wi) × 10
Risk ratings are subjective estimates. Asset class correlation is not factored: this is a simplified heat map not a full risk model. Re rate holdings after major market events. Combine with Portfolio Beta for market sensitivity and Sharpe Sortino Ratio for risk adjusted return context.
Limitations and assumptions
Risk ratings are subjective estimates. Asset class correlation is not factored: this is a simplified heat map not a full risk model. Re rate holdings after major market events. Combine with Portfolio Beta for market sensitivity and Sharpe Sortino Ratio for risk adjusted return context. Portfolio Temperature does not replace personalized advice. Fees, slippage, account specific rules, and behavioral constraints may change real world outcomes.
Key terms
- What is Portfolio Temperature
- Portfolio Temperature visualizes how concentrated your portfolio is across sectors, countries, and currencies.
- What is the HHI score and how is it computed
- Herfindahl Hirschman Index equals the sum of squared weights for each dimension.
- Model assumption
- Green below ten percent per bucket means well diversified within that slice.
Compare alternatives
Pair with Portfolio Rebalancer to fix concentration issues, ETF Overlap Detector for hidden duplicate names, Maximum Drawdown Calculator when trimming overweight positions, and Asset Correlation Matrix to see whether concentrated holdings move together during market stress on portfolios. Use those calculators when portfolio temperature alone does not capture the full decision.
Internal links on portfolios.tools help you chain calculators: run Portfolio Temperature first, then validate edge cases with a specialized tool from the related section below.
FAQ
What is Portfolio Temperature?
Portfolio Temperature visualizes how concentrated your portfolio is across sectors, countries, and currencies. It aggregates holdings into heat maps and flags risky concentration levels so you can rebalance before a sector or country downturn hits disproportionately hard. Institutional investors use similar heat maps to monitor style drift and geographic bets before quarterly risk reviews. Retail investors often discover forty percent technology exposure hidden inside three ETF tickers that looked diversified by name alone. The tool turns allocation percentages and labels into actionable concentration metrics rather than a simple pie chart.
What is the HHI score and how is it computed?
Herfindahl Hirschman Index equals the sum of squared weights for each dimension. Higher HHI means more concentration. For sectors, HHI above twenty five hundred signals high concentration. For countries, HHI above thirty six hundred is a red flag when most exposure sits in one country. Compare your HHI against benchmark indices: S&P 500 sector HHI is roughly eighteen hundred while equal weight portfolio approaches one thousand. HHI of ten thousand means one hundred percent in a single bucket. Falling HHI after rebalancing confirms diversification improved even when position count stayed the same.
How should I interpret the temperature colors?
Green below ten percent per bucket means well diversified within that slice. Yellow ten to twenty percent means moderate exposure worth monitoring. Orange twenty to thirty percent means elevated concentration: consider trimming. Red above thirty percent means a single risk factor dominates. Use color bands to prioritize rebalancing: address red sectors before yellow ones when trimming overweight positions. Colors apply per dimension independently: a stock can be green on country tab but red on sector tab when it is a large US technology name.
What does it mean when a single position is flagged?
A single position exceeding twenty percent triggers an orange flag because one stock or ETF can meaningfully move total portfolio value. Consider whether that position risk matches overall strategy. High conviction bets may intentionally exceed twenty percent but should sit inside a documented risk budget. Index funds rarely trigger position flags unless you concentrate in one ETF ticket at extreme allocation. Trim gradually in taxable accounts to manage capital gains when reducing flagged positions.
How do I read the heat map grid?
The heat map shows sector country intersections. Each cell shows portfolio percentage in a given sector within a given country. Darker cells mean higher concentration at that intersection, helping spot overlapping risks like US Tech dominating. The currency tab adds a third lens: a US investor with eighty percent USD exposure faces different FX risk than one with globally hedged funds. Empty cells are zero exposure: not missing data. Expand country and sector label lists as you add international or thematic holdings.
How do I use this Portfolio Temperature calculator on a phone or tablet?
Yes. Portfolio Temperature runs entirely in your mobile browser with the same formulas as desktop. Optional localStorage may remember inputs on your device when enabled in browser settings.
Where is my data stored when I use Portfolio Temperature?
Nowhere on our servers. Calculations execute locally in your browser. Optional localStorage saves form fields on your device only and never transmits portfolio numbers over the network.
Should I rely on Portfolio Temperature for tax or legal decisions?
No. Portfolio Temperature provides educational math only. Tax law, account rules, and personal circumstances vary. Consult a qualified tax or legal professional before transactions with material consequences.
Related Tools
Pair with Portfolio Rebalancer to fix concentration issues, ETF Overlap Detector for hidden duplicate names, Maximum Drawdown Calculator when trimming overweight positions, and Asset Correlation Matrix to see whether concentrated holdings move together during market stress on portfolios.tools.