# Ex-Post: Definition, Calculation, Vs. Ex-Ante

## What Is Ex-Post?

Ex-post is another word for actual returns and is Latin for "after the fact." The use of historical returns has customarily been the most well-known approach to forecast the probability of incurring a loss on investment on any given day. Ex-post is the opposite of ex-ante, which means "before the event."

### Key Takeaways

• Ex-post is a word for actual returns and translates from Latin as "after the fact."
• Ex-post analysis looks at financial results after they have occurred and utilizes them to predict the likelihood of future returns.
• The ex-post value is obtained by taking into consideration the beginning and ending value of an asset, the growth and decline of the asset, and any earned income.
• Ex-post stands in contrast to ex-ante, which uses estimates to gauge future performance. Ex-post is standard practice as it relies on proven results.

## Understanding Ex-Post

Ex-post information is attained by companies to forecast future earnings. Ex-post information is utilized in studies such as value at risk (VaR), a probability study that approximates the maximum amount of loss an investment portfolio may incur on any day. VaR is defined for a specified investment portfolio, probability, and time horizon.

Ex-post yield differs from ex-ante yield because it represents actual values, essentially what investors earn rather than estimated values. Investors base their decisions on expected returns versus actual returns, which is an important aspect of an investment's risk analysis. Ex-post is the current market price, minus the price the investor paid. It shows the performance of an asset; however, it excludes projections and probabilities.

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## Calculating Ex-Post

Ex-post is calculated using the beginning and ending asset values for a specific period, any growth or decline in the asset value, plus any earned income produced by the asset during the period. Analysts use ex-post data on investment price fluctuations, earnings, and other metrics to predict expected returns. It is measured against the expected return to confirm the accuracy of risk assessment methods.

Ex-post is best used for periods less than a year and measures the yield earned for an investment year to date. For example, for a March 31 quarterly report, the actual return measures how much an investor’s portfolio has increased in percentage from Jan. 1 to March 31. If the number is 5%, the portfolio gained 5% since Jan. 1.

## Ex-Post Analysis

Ex-post performance attribution analysis, or benchmark analysis, gauges the performance of an investment portfolio based on the return of the portfolio and its correlation with numerous factors or benchmarks. Ex-post analysis is the traditional approach of performance analysis for long-only funds.

Ex-post performance analysis typically centers on regression analysis. An analyst executes a regression of the portfolio’s yields versus the returns of the market index to determine how much of a portfolio’s profit and loss might be the result of market exposure. The regression provides the portfolio’s beta to the market index and the amount of alpha the fund was gaining or losing in relation to the market index.

## Ex-Post Forecasting

The formula for calculating ex-post is (ending value - beginning value) / beginning value. The beginning value is the market value when an asset was purchased. The ending value is the current market value of an asset. Ex-post is a forecast prepared at a certain time that uses data available after that time. The forecasts are created when future observations are identified during the forecasting period. It is used to observe known data to assess the forecasting model.

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