![]() ![]() Specifically, we want to know the difference between “profit” and “return”. Now, before we explore how to calculate stock returns, it’s important to get some fundamentals right. No, we won’t ask you to “like”, “subscribe”, or click this button and that.īut people like you do seem to be subscribing to our channel increasingly □ – it’s great to have you all on board. If you’d prefer to learn by video, here’s the related video: ‘Return’ refers to the amount of money that you make from your investment, expressed in percentage terms. If you haven’t seen our post on Investment Fundamentals: Price, Risk & Return, it’s worth reading that first.īut here’s a quick recap of the core point from that article: We’re looking into technologically feasible solutions to overcome this issue. Unfortunately, mobile phones don’t quite render the equations as well as desktops. Just a quick note though – the equations in this article are best viewed on a laptop/desktop. This is probably the most in-depth explanation of how to calculate stock returns on “the internet”. You might want to grab a cup of tea though. Now, to see why this equation works the way it does, and to understand it inside out, read on. use where here reflects the daily return.multiply the daily return by 250 (the approximate number of days the stock market is open for in a year), or.If you’re working with daily data and want to calculate annualized return from daily returns, you can either: This stock return formula holds regardless of whether you’re calculating the daily return, weekly return, monthly return, or annual return depending on the data you’re working with. It’s the “beginning value”, if you like or the initial investment, if you will. ![]() On the other hand reflects the Price at time, aka the price you bought the stock for. Refers to the Price at time, aka the price you sell the stock for put differently, it’s “ending value”. You can calculate the total stock return using this formula / equation: ![]()
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