Arithmetic averages do not compound
The simple mean describes an average observation but can overstate the growth rate when returns vary.
Portfolio return measurement and diagnostics
Separate market performance from investor timing
Calculate arithmetic and geometric averages, time-weighted return, money-weighted return with dated cash-flow timing, inflation-adjusted performance, volatility, drawdown, and a simplified Sharpe ratio.
Plan with context
There is no single average return that answers every performance question.
Portfolio performance, investor experience, compounding, risk, and purchasing power require different measures—especially when contributions and withdrawals occur between volatile periods.
Geometric return matches wealth
The geometric annual rate is the constant return that reproduces the compounded beginning-to-ending path.
Time-weighting removes cash-flow timing
Linking subperiod returns isolates the investment manager or strategy from the investor’s deposits and withdrawals.
Money-weighting follows the investor
IRR gives more influence to periods when more capital was invested and can differ sharply from time-weighted performance.
Real return measures purchasing power
Dividing nominal growth by inflation shows how much spending power changed rather than only how the account statement grew.
Risk metrics need consistent data
Volatility, drawdown, and Sharpe ratios are sensitive to measurement frequency, benchmark choice, fees, and the length of the observation window.
Included
Starting and ending values, four timed external flows, six performance periods with month lengths, cumulative return, arithmetic and geometric averages, TWR, XIRR-style MWR, inflation, volatility diagnostic, Sharpe ratio, drawdown, Chart.js path, and worksheet.
Not included
Daily valuation around cash flows, benchmark alpha and beta, downside deviation, taxes, fee decomposition, currency effects, multiple IRR selection, confidence intervals, or probabilistic forecasting.
Use it well
Use time-weighted results to evaluate the portfolio, money-weighted results to evaluate personal experience, and always match frequency, fees, benchmark, and dates before comparing managers.