I'm running backtests with monthly data going back to the 1920's and I'd like to compare different strategies using inflation adjusted CAGR. But I don't know how to calculate it. Would any of these work? What's the right way?
Could I deflate the starting value of the portfolio using an inflation rate (current_cpi / cpi_at_start)and then use the normal CAGR calculation?
Could I use the normal CAGR calculation to get the nominal return and then calculate the inflation rate (again: (current_cpi / cpi_at_start), then plug those into the inflation adjusted return formula from here: https://www.investopedia.com/terms/i/inflation_adjusted_return.asp
I have all the monthly data... I could calculate monthly returns (logarithmic or otherwise) but then what would I do with them?