Rate of Return Finance question?

Question

Basically for my finance project we had about $500,000 of fake money to invest Ive been keeping track of my portfolio for the past two months below is a data of my balance for the first four days of my investment period
my question is how do i calculate my daily Rate of return I understand the formula is
P1-P0 / (P0) but does P0 stay constant at 500,000 since its my initial investment or does it change daily depending on my new balance??

Date (balance)
initial investment 500,000
9/18/2007 518620.8
9/19/2007 509737.53
9/20/2007 501256.52
9/21/2007 521507.73
9/24/2007 520368.71
9/25/2007 515269.73

Answer 1

Adding to first post.

If you want to calculate the daily return for each day you have to use the previous days balance as P0 for each day calculated.

example to calculate 1 day return for 9/21/2007
521507.73 - 501256.52 / 501256.52

Answer 2

That depends if you want to calculate simple or compounded rate of return. If it is the simple rate of return, then the calculation is (P(n)-P(1)/P(1))/n, or (( $515,269.73 -$500,000 ) / $500,000 ) / 6 = .5%, (6 being the number of days in the sample).

If you are calculating the compounded daily rate of return, the formula is (1+r)^1/n, where r is the total return ( $15,269.73 / $500,000 ), and n is the number of days 6.

In these examples you get the same answer of approx .5%, however if you have a larger sample you will see a big difference.

Answer 3

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Answer 4

If you want to calculate your return since the start:

515269.73-500/000/500000 = 3.05 percent

You can calculate your return for any time period, daily, weekly or from any date, by taking the ending balance for the period, subtracting the beginning balance and dividing by the beginning balance.