Last updated: January 19, 2026
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.
HHI is a mathematical score that measures how 'top-heavy' your portfolio is. It's calculated by squaring the percentage weight of each holding and summing them up.
A score below 1,500 is considered well-diversified. 1,500 to 2,500 is moderately concentrated, and above 2,500 is highly concentrated (risky).
It highlights over-exposure. If one stock makes up a large chunk of your portfolio, your HHI will be high, signaling that your wealth is overly dependent on one company.
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