Definitions
In plain terms
Returns must be multiplied through growth factors, not simply added, when measuring the full multi-period result.
Technical
For simple periodic returns, cumulative return is the product of one plus each return minus one, with missing periods and cash flows handled by policy.
Scope
Adding simple returns is only an approximation and can be materially wrong over volatile or long samples.
Formula
R_cum = product(1 + r_t) - 1R_{cum}=\prod_t(1+r_t)-1| Symbol | Meaning | Unit |
|---|---|---|
r_t | simple return for period t | decimal return |
Output unit: decimal return
Examples
- A governed calculation records cumulative return with its exact basis, effective time, source, and units.
Common misconceptions
- Cumulative Return does not have one universal treatment without the applicable methodology, event terms, and data context.
Concept relationships
Where this concept is used
- ImportantCRSP Cumulative Price Adjustment: Respect the Vendor Basis, Sign, and GapsD02-F01-A04
- ImportantPrice-Return IndexD03-F04-A01
- ImportantGross Total-Return IndexD03-F04-A02
- ImportantNet Total-Return IndexD03-F04-A03
- ImportantExcess-Return IndexD03-F04-A04
- ImportantLeveraged Daily-Reset IndexD03-F05-A01
- ImportantInverse Daily-Reset IndexD03-F05-A02
Evidence and governance
- Fintech Builder Glossary Definition Contract The Fintech Builder · internal governed contract
Supports: preferred label, short definition, technical definition, formula
Limits: Defines governed platform behavior rather than claiming these policies are universally prescribed by external McClellan methodology.
- Reviewed by
- fintech-builder-owner-approved
- Last reviewed
- 2026-07-27
- Next review
- 2027-07-27
- Record status
- published