The Absolute Return Calculator is designed to help you calculate the absolute return on your investment. Absolute return measures the total gain or loss of an investment, expressed as a percentage, over a specific period. This metric is essential for investors who want to evaluate the performance of their investments without considering external benchmarks or market indices.
Formula of Absolute Return Calculator
The absolute return is a measure of the gain or loss of an investment over a specific period of time. The formula to calculate absolute return is:
To use this formula:
- Subtract the beginning value of the investment from the ending value.
- Divide the result by the beginning value.
- Multiply by 100 to convert the result into a percentage.
Common Absolute Return Values Table
Below is a table with general terms that people commonly search for. This table provides pre-calculated absolute return values for quick reference:
| Beginning Value | Ending Value | Absolute Return (%) |
|---|---|---|
| 1000 | 1200 | 20 |
| 1000 | 1500 | 50 |
| 1000 | 800 | -20 |
| 1000 | 1000 | 0 |
| 2000 | 2500 | 25 |
Example of Absolute Return Calculator
Let's look at a practical example to understand how to calculate absolute return.
Example:
- Beginning Value: $1,000
- Ending Value: $1,200
Using the formula:
Absolute Return = ((1200 - 1000) / 1000) * 100 = (200 / 1000) * 100 = 0.2 * 100 = 20%
In this example, the absolute return on the investment is 20%.
Most Common FAQs
A1: Absolute return measures the gain or loss of an investment over a specific period without comparing it to any benchmark. Relative return, on the other hand, measures the performance of an investment compared to a benchmark or market index.
A2: Absolute return is important because it provides a clear picture of how much an investment has gained or lost over time. It helps investors make informed decisions based on the actual performance of their investments.
A3: Yes, absolute return can be negative if the ending value of the investment is less than the beginning value. This indicates a loss on the investment.