What are 'Historical Returns'

The past performance of a security or index. Analysts review historical return data when trying to predict future returns, or to estimate how a security might react to a particular situation, such as a drop in consumer demand. Historical returns can also be useful when estimating where future points of data may fall in terms of standard deviations.

BREAKING DOWN 'Historical Returns'

Looking at historical data can provide some insight into how a security or market has reacted to a variety of different variables, from regular economic cycles to sudden world events. Investors looking to interpret historical returns should keep one caveat in mind: you can't assume that the future will be like the past. The older the historical return data is, the more likely it is to be less useful when predicting future returns.

RELATED TERMS
  1. Predictive Analytics

    The use of statistics and modeling to determine future performance ...
  2. Currency History

    The historical values of a base currency in relation to the values ...
  3. Historical Currency Exchange Rates

    A collection of historical exchange rates that are used to provide ...
  4. Abnormal Return

    A term used to describe the returns generated by a given security ...
  5. Ex-Post Risk

    A type of risk measurement technique that uses historic returns ...
  6. Estimated Long-Term Return

    A unit investment trust's estimated return over the life of the ...
Related Articles
  1. Investing

    Explaining Expected Return

    The expected return is a tool used to determine whether or not an investment has a positive or negative average net outcome.
  2. Investing

    Projected Returns: Honing The Craft

    Find out how to forecast long-term returns on the three major asset classes.
  3. Retirement

    Can Your Retirement Portfolio Rely on High Rates of Return?

    Some experts speculate that stock market returns may be headed downward and investors should strategize accordingly. But are they right?
  4. Investing

    The Uses And Limits Of Volatility

    Check out how the assumptions of theoretical risk models compare to actual market performance.
  5. Investing

    4 Benefits of Holding Stocks for the Long Term

    Discover some of the benefits that come from buying and holding stocks for longer periods of time, such as tax savings and risk minimization.
  6. Investing

    A Simplified Approach To Calculating Volatility

    Volatility is sometimes greater than anticipated, but the way it’s measured can compound the problems that occur when it’s unexpected.
  7. Investing

    Understanding Historical Cost

    Historical cost equals the original purchase price of an asset recorded on a company’s balance sheet.
  8. Investing

    Stock Market Risk: Wagging The Tails

    The bell curve is an excellent way to evaluate stock market risk over the long term.
  9. Investing

    Is Apple's Stock Over Valued Or Undervalued?

    Despite several drawbacks, the CAPM gives an overview of the level of return that investors should expect for bearing only systematic risk. Applying Apple, we get annual expected return of about ...
  10. Investing

    Understanding The Sharpe Ratio

    This simple ratio will tell you how much that extra return is really worth.
RELATED FAQS
  1. Which investments have the highest historical returns?

    Stocks are historically considered the best investment in terms of rate of return. Historically, they outperform other investments ... Read Answer >>
  2. How have futures performed historically?

    See how futures products have historically performed and why they tend to perform best at specific times during a normal ... Read Answer >>
  3. How do I find historical prices for stocks?

    Whether for research purposes, bookkeeping or even general interest in historical performance, this is a question that many ... Read Answer >>
  4. How is the expected market return determined when calculating market risk premium?

    Find out how the expected market return rate is determined when calculating market risk premium and how these figures are ... Read Answer >>
  5. How can you calculate volatility in Excel?

    Understand how to calculate historical volatility using Microsoft Excel from closing price raw data, including why this metric ... Read Answer >>
  6. What annual return could an investor expect on average from the telecommunications ...

    Learn what annual return an investor can expect on average from the telecommunications sector and which factors influence ... Read Answer >>
Hot Definitions
  1. 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 ...
  2. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  3. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  4. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  5. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  6. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
Trading Center