Returns
Returns normalize profit by starting capital to create a unitless and scale-independent measure. Simple percentage returns have an asymmetry that complicates analysis. A round trip back to the starting value does not make simple returns su…
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Returns normalize profit by starting capital to create a unitless and scale-independent measure. Simple percentage returns have an asymmetry that complicates analysis. A round trip back to the starting value does not make simple returns sum to zero. Simple returns cannot be added to compute compound returns. Absolute profit lacks context without the starting capital.