Historical Returns

AAA

DEFINITION of '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.

INVESTOPEDIA EXPLAINS '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. Sacred Cow

    A firmly held mainstream belief that is considered to be true ...
  2. Standard Deviation

    1. A measure of the dispersion of a set of data from its mean. ...
  3. Historical Volatility - HV

    The realized volatility of a financial instrument over a given ...
  4. Return

    The gain or loss of a security in a particular period. The return ...
  5. Correlation

    In the world of finance, a statistical measure of how two securities ...
  6. Record High

    The highest historical price level reached by a security, commodity ...
RELATED FAQS
  1. What does Value at Risk (VaR) say about the "tail" of the loss distribution?

    The value at risk (VaR) is a statistical measure that assesses, with a degree of confidence, the financial risk associated ... Read Full Answer >>
  2. Which investments have the highest historical returns?

    Historically, investments in the stock market have experienced the greatest return. They have performed better than all other ... Read Full Answer >>
  3. How have futures performed historically?

    The aggregate historical returns on futures and future-related products has been quite good since data has been tracked, ... Read Full Answer >>
  4. What is a "linear" exposure in Value at Risk (VaR) calculation?

    A linear exposure in the value-at-risk, or VaR, calculation is represented by positions in stocks, bonds, commodities or ... Read Full Answer >>
  5. What is the criteria for a simple random sample?

    Simple random sampling is the most basic form of sampling and can be a component of more precise, more complex sampling methods. ... Read Full Answer >>
  6. What are some examples of ways that sensitivity analysis can be used?

    Sensitivity analysis is an analysis method that is used to identify how much variations in the input values for a given variable ... Read Full Answer >>
Related Articles
  1. Markets

    Using Historical Volatility To Gauge Future Risk

    Use these calculations to uncover the risk involved in your investments.
  2. Fundamental Analysis

    Financial Markets: Random, Cyclical Or Both?

    Are the markets random or cyclical? It depends on who you ask. Here, we go over both sides of the argument.
  3. Forex Education

    Introduction to Types of Trading: Technical Traders

    Learn about the different traders and explore in detail the broader approach that looks to the past to predict the future.
  4. Fundamental Analysis

    Calculating Future Value

    Future value is the value of an asset or cash at a specified date in the future that is equivalent in value to a specified sum today.
  5. Economics

    What is Deadweight Loss?

    Mainly used in economics, deadweight loss can be applied to any deficiency caused by an inefficient allocation of resources.
  6. Investing

    The Strong Dollar’s (Real) Toll On Tech Stocks

    A large portion of U.S. technology companies’ sales occur overseas, given the strong international business and consumer demand from many U.S. tech firms.
  7. Fundamental Analysis

    How to Calculate a Coverage Ratio

    In broad terms, the higher the coverage ratio, the better the ability of the enterprise to fulfill its obligations to its lenders.
  8. Economics

    How to Do a Cost-Benefit Analysis

    The benefits of a given situation or business-related action are summed and then the costs associated with taking that action are subtracted.
  9. Fundamental Analysis

    Calculating the Herfindahl-Hirschman Index (HHI)

    The Herfindhal-Hirschman Index, (HHI) is a measure of market concentration and competition among market participants.
  10. Fundamental Analysis

    Calculating Net Interest Margin

    Net interest margin is a metric used to measure the effectiveness of a company’s investment decisions, particularly financial institutions.

You May Also Like

Hot Definitions
  1. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  2. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  5. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
  6. Terminal Value - TV

    The value of a bond at maturity, or of an asset at a specified, future valuation date, taking into account factors such as ...
Trading Center