Return

Return is the price change for the period, usually expressed as a percentage. Positive values mean gains, negative values mean losses.

The calculation:

Return = (End Price - Start Price) / Start Price × 100%

Types of returns:

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Daily return: Day-over-day price change

Period return: Change over weeks, months, or years

Total return: Price return plus dividends reinvested

Annualised return: Returns scaled to a yearly equivalent

Why returns matter:

• Performance measurement: Standard way to measure investment gains or losses
• Comparison: Returns allow comparison across different price levels
• Risk analysis: Volatility is measured using return distributions
• Portfolio analysis: Returns combine to show overall portfolio performance

Return considerations:

• Compounding: Multi-period returns compound, not add
• Risk-adjusted: Higher returns with higher risk may not be better
• Benchmarking: Compare returns to relevant indices
• Time horizon: Short-term returns are noisy; long-term returns reveal trends

Returns are the foundation of investment analysis. Consistent positive returns over time, especially risk-adjusted returns, indicate successful investing.