Beta-Neutral Hedge Notional Calculator
Beta hedge: hedge notional = spot value × (spot beta − target beta) ÷ hedge-instrument beta; optional face value converts to contracts.
Results
Fill in the inputs and click Calculate.
- Required Hedge Notional
- –
- Required Contracts
- –
Risk disclaimer
Beta drifts and hedges have tracking error; results assume static betas and promise no perfect neutrality.
Why Beta instead of 1:1?
Assets differ in sensitivity to the market (β): spot β=1 tracks the index, so a higher-beta book needs proportionally more hedge.
A target β of 0 means “neutral”; other targets hedge partway or leave deliberate exposure.
How to use
- Enter the spot value and its beta (default 1).
- Enter the hedge instrument's beta (futures ≈1) and the target beta (default 0).
- Optional: enter a per-contract face value for contract count.
- Click Calculate for the required hedge notional and contracts.
Formula
- Hedge notional = spot value × (spot β − target β) ÷ hedge β
- Contracts = hedge notional ÷ face value
- Positive means short the hedge; negative means build it long.
Example
Spot 50,000 with β 1, hedge β 1, target 0 → short notional 50,000; face 100 → 500 contracts.
With spot β 1.5 you need 75,000 notional (750 contracts).
FAQ
Where do betas come from?
Usually regression against an index or the venue's spec; this page does not estimate beta for you.
Can the result be negative?
Yes. When the target β exceeds the spot β the result is negative, meaning you long the hedge instrument instead of shorting it.