DEFINITION of 'Intraday Return'

The intraday return is one of the two components of the total daily return generated by a stock. Intraday return measures the return generated by a stock during regular trading hours, based on its price change from the opening of a trading day to its close. Intraday return and overnight 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. It is also called daytime return.

BREAKING DOWN 'Intraday Return'

Academic research reveals that intraday return is a bigger contributor to total return than overnight return. It also suggests that there is a slight negative correlation between overnight return and intraday return.

Intraday return is of particular importance for day traders, who use daytime gyrations in stocks and markets to make trading profits, and rarely leave positions open overnight. Day trading strategies are not as commonplace for regular investors as they were before the 2008-2009 recession.

Technical analysis and investment techniques based on technical analysis often use intraday price and volume data to derive strategies that look to exploit patterns in security momentum, moving averages and unique cycles. Empirical studies are mixed on the effectiveness of technical strategies, but behavioral economics and advanced quantitative methods are shedding light on new opportunities.

Intraday security returns are also instrumental to the daily functions underlying margin accounts offered by brokerages and the exchange of collateral between international commercial financial entities. In the case of margin extended by a brokerage firm, if intraday returns are substantial, they may trigger a margin call to a client(s). To limit counterparty credit risk, commercial banks exchange collateral daily — based on the price behavior of underlying securities.

  1. Intraday

    Intraday is the high and low price of a security that occur in ...
  2. Overnight Return

    Overnight return measures the return generated by a stock when ...
  3. Intraday Momentum Index - IMI

    The Intraday Momentum Index, or IMI, is a technical indicator ...
  4. Relative Return

    Relative return is the return an asset achieves over a period ...
  5. Annual Return

    Annual return is the compound average rate of return for a stock, ...
  6. Historical Returns

    Historical returns include the tabulation and analysis of past ...
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