Portfolio Analytics

Active Return

Definition

What is Active Return?

The difference between a portfolioThe complete collection of investments owned by an investor or managed under one mandate.'s return and its benchmarkA reference index or rate used to evaluate a fund's performance.'s return.

Example in practice

How This Looks in Practice

A fund returning 14% against a 10% benchmark earns 4% active return.

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Related Terms

Portfolio Analytics

Correlation

A statistic ranging from minus one to plus one that describes how two return series move together.

Portfolio Analytics

Positive Correlation

A relationship in which two assets tend to move in the same direction.

Portfolio Analytics

Negative Correlation

A relationship in which two assets tend to move in opposite directions.

Risk Management

Stress Test

An analysis of portfolio performance under severe but plausible scenarios.

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