# Cumulative portfolio returns vs. product of cumulative asset returns

I wasn't able to find something that addressed this specifically with the search terms I was using, though I am sure an answer exists here.

Columns B & C are weighted asset returns (i.e. raw asset return * weight). Column D represents a portfolio of the two assets and is the sum of the weighted returns for each period. Cells B3 & C3 are the cumulative returns of the weighted asset returns. Cell D3 is the cumulative return of the portfolio. Cell F3 is the product of the two cumulative asset returns.

QUESTION: Why are do the calculations in the yellow cells produce slightly different results?

I think this may be an example of where I've forgotten some fairly basic arithmetic concepts, but intuitive explanations would greatly be appreciated. Link to spreadsheet below. Thanks.

• For example: split your money 50/50 between Stock A and Stock B. In next period Stock A is unchanged and Stock B goes to zero. Then you lost $\frac{1}{2}$ you money while Formula F2 incorrectly says you lost 100%. – Alex C Sep 1 '17 at 0:02