Overnight Return

AAA

DEFINITION of 'Overnight Return'

One of the two components of the total daily return generated by a stock. Overnight return measures the return generated by a stock when the market is closed, based on its price change from the close of one trading day to the opening of the next trading day. Overnight return and intraday return together constitute the total daily return from a stock, which is based on the price change of a stock from the close of one trading day to the close of the next trading day.

INVESTOPEDIA EXPLAINS 'Overnight Return'

The overnight return component of total return is significant because most companies report their financial results when markets are closed, in order to enable all investors to receive the information at the same time. Most companies also make major announcements after market hours, rather than in the middle of the trading day. As a result, the opening price of a stock is often likely to be materially different from its previous day's close.


In addition, as global financial markets display a higher degree of correlation thanks to globalization and the efficient dissemination of information, stocks are now increasingly likely to be affected by developments in overseas markets, which would also boost the importance of overnight returns.

RELATED TERMS
  1. Intraday

    Another way of saying "within the day". Intraday price movements ...
  2. Expected Return

    The amount one would anticipate receiving on an investment that ...
  3. Actual Return

    The actual gain or loss of an investor. This can be expressed ...
  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. Total Return

    When measuring performance, the actual rate of return of an investment ...
Related Articles
  1. Active Trading Fundamentals

    Charting Your Way To Better Returns

    Learn about the powerful hybrid techniques that take advantage of both technical and fundamental analysis.
  2. Bonds & Fixed Income

    Find The Highest Returns With The Sharpe Ratio

    Learn how to follow the efficient frontier to increase your chances of successful investing.
  3. Bonds & Fixed Income

    Boost Bond Returns With Laddering

    If you want a diversified portfolio and steady cash flow, check out this fixed-income strategy.
  4. Mutual Funds & ETFs

    Published Mutual Fund Returns Not Always What They Appear

    Survivorship bias erases substandard performers, distorting overall mutual fund returns.
  5. Active Trading

    Market Cycles: The Key To Maximum Returns

    You need to understand the various phases of the market cycle to avoid bubbles and make the best investments.
  6. Investing

    Are These 2015's Most-Promising Small-Cap Stocks?

    At least one of these small-caps should spike in 2015.
  7. Mutual Funds & ETFs

    Are These the Top Inverse ETFs of 2015?

    Short shy? Here's a list of top inverse ETFs to help you profit from a decline in the value of an index or group of stocks.
  8. Investing

    The Impact Of A Stronger Dollar In The Markets

    The economy continues to improve, but also demonstrated that some areas of the stock market are more vulnerable to an increase in interest rates.
  9. Chart Advisor

    These 4 Swing Trades Could Place You in the Money

    Take advantage of moves both higher and lower with swing trades based on trend channels.
  10. Retirement

    Strategies To Build Your Retirement Portfolio

    Retirement indexes are designed to estimate how much an investor would need to have saved today to generate annual income in retirement, starting at 65.

You May Also Like

Hot Definitions
  1. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  2. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  3. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  4. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  5. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  6. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
Trading Center