Measuring performance
Contribution to return
How many percentage points of the portfolio’s total return one holding was responsible for.
How it works
Contribution is a holding’s return multiplied by its weight. It is what turns a list of individual performances into an explanation of the portfolio’s result.
It corrects the natural bias towards remembering the biggest percentage movers rather than the ones that actually moved the needle.
Formula
Contribution = holding weight × holding returnRelated terms
More in Measuring performance
- Equity risk premium
- Calmar ratio
- Information ratio
- CAGR
- Look-ahead bias
- Benchmark
- Mark to market
- Behaviour gap
All 29 Measuring performance terms · The full glossary, 433 terms
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