Abnormal Return is a financial term that refers to the difference between the actual return on an investment and the expected return based on the overall market performance or a benchmark index. It is a measure used to evaluate the performance of an investment or portfolio by determining whether it outperformed or underperformed the market or a specific benchmark. A positive abnormal return indicates that the investment performed better than expected, while a negative abnormal return suggests underperformance. This metric is commonly used by investors, analysts, and fund managers to assess the skill or effectiveness of investment strategies and to make informed decisions about portfolio allocation.
Abnormal return refers to the difference between the actual return on a stock and the expected return. It is often used in finance and investment analysis to measure the performance of a stock or portfolio relative to a benchmark or market index. Abnormal return can be positive or negative, and is typically calculated using statistical methods to account for market volatility and other factors. In legal terms, abnormal return may be used in cases of securities fraud or insider trading to demonstrate the impact of illegal activities on stock performance.
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This glossary post was last updated: 29th March 2024.
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