HHI (Herfindahl-Hirschman Index)
Definition
A measure of portfolio concentration calculated as the sum of squared position weights, ranging from near 0 (diversified) to 1 (single stock).
Explanation
HHI quantifies concentration risk with a single number. An equally weighted portfolio of 20 stocks has HHI of 0.05 (1/20). A portfolio with 50% in one stock has HHI of at least 0.25. Generally: HHI below 0.10 is well-diversified, 0.10-0.18 is moderate concentration, above 0.18 is highly concentrated. Stoquity monitors HHI for every portfolio and flags excessive concentration in the compliance dashboard. The AI engine targets HHI below 0.12 for diversified portfolios.
Formula
HHI = Σ wi²
How Stoquity Uses This
Stoquity incorporates hhi (herfindahl-hirschman index) analysis across its portfolio management platform, providing real-time monitoring and AI-powered insights for every portfolio.
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