DEFINITION of 'Batting Average'

A statistical measure used to measure an investment manager's ability to meet or beat an index. Batting average is calculated by dividing the number of days (or months, quarters, etc.) in which the manager beats or matches the index by the total number of days (or months, quarters, etc.) in the period of question and multiplying that factor by 100.

BREAKING DOWN 'Batting Average'

An investment manager who outperforms the market in 15 out of a possible 30 days would have a statistical batting average of 50. The longer the time period taken in the sample size, the more statistically significant the measure becomes. Many analysts use this simple calculation in their broader assessments of individual investment managers.

RELATED TERMS
  1. Exchange-Traded Commodity (ETC)

    What an exchange-traded commodity (ETC) is, and how it works. ...
  2. Statistical Significance

    A result that is not likely to occur randomly, but rather is ...
  3. Average Return

    The simple mathematical average of a series of returns generated ...
  4. Composite

    A grouping of equities, indexes or other factors combined in ...
  5. Linearly Weighted Moving Average

    A type of moving average that assigns a higher weighting to recent ...
  6. Statistics

    A type of mathematical analysis involving the use of quantified ...
Related Articles
  1. Investing

    BATS, Second-Largest U.S. Equity Exchange, to IPO (BATS, ICE)

    BATS Global Markets Inc., which runs four U.S. equity exchanges and has branched out into forex‚Äč, options and European equities, plans to IPO on its own exchange Friday using the ticker BATS.
  2. Investing

    BATS Up Nearly 20% Following Successful IPO

    The second time's the charm for BATS Global Markets Inc. (BATS), which priced 13.3 million shares at $19 per share Thursday, in the first major IPO of the year.
  3. Financial Advisor

    Does Your Investment Manager Measure Up?

    These key stats will reveal whether your advisor is a league leader or a benchwarmer.
  4. Personal Finance

    Jump Start Your Financial Career With The BAT

    The BAT is quickly becoming known in the job market as a tool to provide a window into the minds of those seeking financial jobs.
  5. Investing

    Understanding Statistics

    Statistics provide the means to analyze data and then summarize it into a numerical form.
  6. Investing

    How is an ETC different from an ETF? (IAU)

    An exchange traded commodity (ETC) has many similarities to an exchange traded funded (ETF), but also a few differences.
  7. Investing

    What is an Index?

    An index is a statistical means of calculating a change in an economy or market.
  8. Investing

    R-Squared

    Learn more about this statistical measurement used to represent movement between a security and its benchmark.
  9. Investing

    The Pros and Cons of Indexes

    Learn about the advantages and disadvantages of stock indexes and passive index funds. Discover how there is an opportunity cost to using index funds.
  10. Investing

    How To Calculate Your Investment Return

    How much are your investments actually returning? Find out why the method of calculation matters.
RELATED FAQS
  1. How is cash flow affected by Average Collection Period?

    See how reducing a company's average collection period can help cash flow, and learn why collections practices are so important ... Read Answer >>
  2. Is it possible to beat the market?

    "Beating the market" means trying to earn an investment return greater than that of the S&P 500 index, one of the most popular ... Read Answer >>
  3. Are exponential moving averages more effective than simple or weighted moving averages?

    Learn about different types of moving averages, as well as moving average crossovers, and understand how they are used in ... Read Answer >>
  4. How is a simple moving average calculated?

    Learn about the simple moving average, how the indicators are used, and how to calculate a stock's simple moving average ... Read Answer >>
  5. How is margin interest calculated?

    Before running a calculation you must first find out what rate your broker-dealer is charging to borrow money. The broker ... Read Answer >>
Hot Definitions
  1. IRS Publication 970

    A document published by the Internal Revenue Service (IRS) that provides information on tax benefits available to students ...
  2. Federal Direct Loan Program

    A program that provides low-interest loans to postsecondary students and their parents. The William D. Ford Federal Direct ...
  3. Cash Flow

    The net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company's ...
  4. PLUS Loan

    A low-cost student loan offered to parents of students currently enrolled in post-secondary education. With a PLUS Loan, ...
  5. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  6. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
Trading Center