Trading days or Calendar days for Compound Annual Growth Rate?

When calculating CAGR for intervals shorter than a year (or intervals that are longer than, but not integer years in length), should you use the 252 trading days or the 365.25 calendar days?

The formula I am using follows:

CAGR = ( Current Value / Initial Value ) ^ (1 / (Days passed / Days in the year)) - 1

You can use both standards, but when you apply or compare this rate the standards must be equal, and it should be noted which convention you used.

Note that 300/365 yeardays would in percentage be equal to 205/250 tradingdays, so its really just a convention that would make no difference in actual time.

It depends on what makes more economic sense:

1. If you are calculating CAGR for FX (which is traded effectively 24/7) strategy returns for instance, it would seem fair to use 365.25 calendar days.

2. If you are calculating CAGR for internal reporting of trading strategy returns on a product with 5 market sessions per week, it would seem fair to use 252 calendar days.

3. If you are reporting CAGR to a potential LP investor or fund allocator, they would be more interested in the CAGR they will experience at the individual tax year level, so it would also seem fair to use 365.25 calendar days.

[ (Current Value / Initial Value)^(365/n)-1 ] (n= no of days)