# How to get twice the expected return of S&P 500

If I create a diversified portfolio of 2*beta stocks, can I expect to get twice the return of S&P 500.

Example: Out of the universe of stocks available to me I randomly choose 10 stocks whose betas are 2. For a year if S&P 500 got 10 %, does that mean I will make 20 % in my portfolio. Reverse is true as well, if S&P made -10 %, I will make -20%.

Do these statements make sense ?

Thanks. Coder

In theory, if you create a fully diversified portfolio with $\beta=2$ you should get 2 times the risk premium on the market. In practice the SML of the CAPM is too flat, meaning that you would be better off buying low beta stocks and shorting high beta stocks. If you don’t trust me read Betting Against Beta by Andrea Frazzini and Lasse Haje Pedersen.They say in the abstract: