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. Actual Return

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

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

    In the world of finance, a statistical measure of how two securities ...
  4. Intraday

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

    The gain or loss of a security in a particular period. The return ...
  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. Active Trading Fundamentals

    What does the gearing ratio say about risk?

    Find out why lenders and investors pay close attention to a firm's gearing ratios, and why both too much and too little borrowing can be risky.
  7. Investing Basics

    What is the difference between the gearing ratio and the debt-to-equity ratio?

    Dive deeper into gearing ratios: what are they, how are they used and why the debt to equity ratio is one of the most popular analytical gearing tools.
  8. Mutual Funds & ETFs

    Where does a hedge fund get its money?

    Learn how a hedge fund is structured and how the managing partner of the fund goes about the process of finding and soliciting investors.
  9. Mutual Funds & ETFs

    What is the purpose of a hedge fund?

    Find out what a hedge fund is, how it is set up and why it is different than other forms of investment partnerships like mutual funds.
  10. Chart Advisor

    How To Trade The Biggest U.S. Companies In 2015

    Apple, Microsoft, Exxon and Google have different outlooks for 2015. Here's a look at their technicals along with potential buy and sell points.

You May Also Like

Hot Definitions
  1. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  2. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  3. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  4. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  5. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
  6. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
Trading Center