currently, I'm calculating the return of a stock, for individual year and multiple years. I tend to answer the following question.
- Return of a stock for end of year 2010 (Individual year)
- Return of a stock for end of year 2011 (Individual year)
- Return of a stock for beginning of year 2010 till end of year 2011 (Multiple years)
Assuming,
- I purchase 1 unit of stock at 1st January 2010, at price $1
- No further buy transaction & sell transaction in between, in beginning of year 2010 till end of year 2011
Here's my calculation
Return for end of year 2010 (Stock price reach $2.5 at end of year)
Date Price
01/01/2010 -$1.0 (Invest)
31/12/2010 $2.5
XIRR([01/01/2010, 31/12/2010], [-1.0, 2.5]) = 1.506
Return for end of year 2011 (Stock price reach $1.8 at end of year)
We assume stock opening price at the beginning of year is $2.5.
Date Price
01/01/2011 -$2.5 (Invest)
31/12/2011 $1.8
XIRR([01/01/2011, 31/12/2011], [-2.5, 1.8]) = -0.2806
Return for beginning of year 2010 till end of year 2011 (Multiple years)
Date Price
01/01/2010 -$1.0 (Invest)
31/12/2011 $1.8
XIRR([01/01/2010, 31/12/2011], [-1.0, 1.8]) = 0.3422
I was wondering, is there any relationship between 0.3422 (Return for multiple years) and 1.506 (Return for individual year), -0.2806 (Return for individual year).
Is there a way for me to derive 0.3422, based on value 1.506 & -0.2806 ?