FTB-C000107 / Formula component

Cumulative Return

Cumulative return is the total compounded change across a sequence of periodic returns.

Also known ascompounded returnmulti-period return

Intermediate Formula defined 7 linked topicsPublished

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) - 1
LaTeX: R_{cum}=\prod_t(1+r_t)-1
SymbolMeaningUnit
r_tsimple return for period tdecimal 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

Prerequisites

Related

Required by

Where this concept is used

Tutorials planned

These catalogued topics use this concept, but their complete build has not shipped yet.

  • D02-F01-A04 Important
  • D03-F04-A01 Important
  • D03-F04-A02 Important
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Evidence and governance

  1. 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
Last reviewed
2026-07-27
Next review
2027-07-27
Record status
published
Written by

Fintech engineer building market-data and financial systems, and the author of every article, glossary record, and reference implementation on The Fintech Builder.