๐ŸŽฒ

Expected Return Calculator

Compute the probability-weighted expected return, variance, and standard deviation across three economic scenarios (bull, base, bear).

Probability of the optimistic scenario (%); all three should sum to 100
Expected return if the bull scenario occurs (%)
Probability of the base-case scenario (%)
Expected return if the base scenario occurs (%)
Probability of the pessimistic scenario (%)
Expected return if the bear scenario occurs (%, can be negative)

Results

Expected Return0.00%
Variance0.0,000
Standard Deviation (Risk)0.00%

๐Ÿ“–What is it?

The expected return calculator uses probability-weighted scenarios to estimate the mean return of an investment and measure its risk through variance and standard deviation. It is a fundamental tool in portfolio analysis and risk assessment.

๐ŸŽฏHow to use

Define three scenarios (bull, base, bear) with their probabilities and expected returns. Probabilities should ideally sum to 100%. The calculator computes the expected return, variance, and standard deviation.

๐Ÿ’กExample scenario

Bull: 30% probability, +25% return. Base: 50% probability, +10% return. Bear: 20% probability, รขห†โ€™15% return. Expected return = (30รƒโ€”25 + 50รƒโ€”10 + 20รƒโ€”(รขห†โ€™15)) / 100 = 9.5%. The standard deviation measures how spread out the outcomes are.

๐Ÿ†Pro tip

A higher standard deviation means more uncertainty. Use the coefficient of variation (std dev / expected return) to compare the risk-per-unit-of-return across different investments.