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The Herfindahl-Hirschman Index (HHI) measures concentration by summing the squares of each holding's portfolio weight. Higher HHI means more concentration.
HHI ranges from near 0 (perfectly diversified) to 10,000 (single holding). An HHI below 1,500 is generally considered diversified.
We use HHI to calculate portfolio risk scores and identify over-concentration.
Understanding herfindahl index (hhi) helps you make better investment decisions and plan for taxes. Use our portfolio risk checker to see how it applies to your situation.
