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Chart Calculations: How do we calculate the simple average annual price return?

Chart Calculations: How do we calculate the simple average annual price return?

How do we calculate the simple average annual price return over 5 or 10 years for our charts?

There are a wide variety of ways to figure average return. We use a very simple method, which is the same method most financial media uses.

Here’s a quick explanation of how we arrive at our chart numbers …

  • Take the difference between where the index settled now and where it settled X years ago.
  • Divide the resulting number (difference) by the settlement price from X years ago.
  • Divide that resulting by X years. 

Remember that these are price returns, not total returns (which have dividends factored in and are therefore higher).

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