Category: calculators
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Arithmetic average return calculator and formula
In this lesson, we introduce a simple yet really useful measure of investment performance. In particular, we discuss the arithmetic average return formula and provide a practical arithmetic average return calculator. It is really important for investors to be able to accurately assess the performance of their investments. In that sense, arithmetic average (or mean)…
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Geometric average return calculator and formula
In this post, we explain the geometric average return formula using numerical examples and discuss how it differs from the arithmetic average return. We provide a practical geometric average return calculator as well. Geometric average return formula The geometric average return formula can be written as follows: While the formula looks complicated at first sight,…
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Jensen’s alpha formula and calculator
Jensen’s alpha is a popular performance evaluation metric, which was developed by the American financial economist Michael Jensen in the late 60s. It is a risk-adjusted performance measure (other examples include the Sharpe ratio and Treynor ratio) and is theoretically linked to the capital asset pricing model (or the CAPM). Jensen’s alpha formula We can…
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Portfolio return calculator and formula
In this post, we explain the formula behind the calculation of portfolio returns. Furthermore, we provide a free online portfolio return calculator, which works as a portfolio expected return calculator as well as a portfolio realized return calculator. Finally, with this port, we make an introduction to the modern portfolio theory as well. So far…
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Expected return calculator and formula
When evaluating an asset’s past performance, we can make use of the historical (or realized) average return. In that sense, the historical average return is a backward-looking measure. But, in order to forecast an asset’s future performance, we need a forward-looking measure. This measure is called the expected return. In this post, we offer an…
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Holding period return calculator and formula
When investors buy securities (e.g., stocks), they may hold them for months or years before selling them. The duration during which an investor holds on to a particular security is known as the holding period and the return over that period is referred to as the holding period return. This is typically abbreviated as HPR.…
