Portfolio Hedge Calculator

Estimate how much S&P 500 futures exposure would offset a chosen share of a portfolio's beta. The calculator separates the economic target from the whole-contract position you can actually trade.

Inputs

Use the market value of the portfolio whose broad U.S. equity exposure you want to hedge.
Beta is an estimate, not a fixed property. A value of 0.8 means the portfolio is modeled as having 80% of the S&P 500's broad-market sensitivity.
Enter a percentage from 0 to 100. A 50% target means cutting the estimated beta exposure in half, not cutting the portfolio value in half.
The prefilled 6,000 is an illustrative round number, not a live quote. Replace it with the futures price you intend to use.

Estimated hedge

$400,000Estimated beta-adjusted exposure
$200,000Target short hedge notional
$30,000Notional per MES contract
6.67Exact contracts before rounding
7Nearest whole contracts to short
0.38Approximate residual portfolio beta

Rounding to 7 MES contracts produces about $210,000 of short notional, versus the $200,000 target. The rounding difference is $10,000. This is sizing math, not a recommendation to enter the hedge.

What the calculator is doing

The calculation starts with exposure rather than contract count. That prevents a common mistake: hedging the full dollar value of a portfolio even when its estimated beta is materially above or below one.

Beta-adjusted exposure = portfolio value × estimated beta
Target hedge notional = beta-adjusted exposure × desired reduction
Contract notional = futures price × contract multiplier
Exact contract count = target hedge notional ÷ contract notional

For the default example, a $500,000 portfolio with a beta of 0.8 has about $400,000 of modeled S&P 500 exposure. Cutting that exposure by 50% creates a $200,000 hedge target. The futures contract size determines how closely a whole-contract position can match that target.

The calculator rounds to the nearest whole contract and shows the resulting residual beta. Smaller contracts can reduce rounding error, but smaller notional does not remove futures risks such as leverage, margin calls, basis risk, contract rolls, and execution differences.

When this math is not enough

A beta hedge is only as good as the beta estimate and benchmark match. A concentrated technology portfolio, small-cap portfolio, international portfolio, or portfolio with large option exposures may not behave like the S&P 500 when markets move sharply. Correlations and beta can change during stress.

This tool also does not estimate margin, financing, tax treatment, roll costs, transaction costs, or the timing decision. Read the portfolio hedging guide for the broader decision process and the market-timing guide for why deciding when to add or remove a hedge is a separate problem.

Contract-size sources