Each rate of return is applied differently depending on the information you want to check, and the methods are also different.
simple rate of returnis the ratio of total profits divided by the initial amount, Time-Weighted Returnevaluates performance over time, Money-weighted rate of returnIt measures performance taking into account changes in amount.
- Simple rate of return:
(Ending asset - Underlying asset) + (Period withdrawal - Period deposit) / Underlying asset + Period deposit
- Time-weighted return :
(End-of-period assets - Beginning assets) + (Period withdrawal - Period deposit) / Beginning assets + Period average deposit
- Amount-weighted rate of return:
(End-of-period assets - Underlying assets) + (Period withdrawal - Periodic deposit) / ((Total daily underlying assets + Total daily deposit) / Periodic deposit date)
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