1. What is the Daily to Annual Return Conversion?

The daily to annual return conversion calculates the compounded annual return based on a daily return rate. This is commonly used in finance to compare investment performance across different time periods.

2. How Does the Calculator Work?

The calculator uses the annual return formula:

Where:

• \( Daily \) — Daily return rate (unitless)
• \( Annual \) — Annual return rate (unitless)

Explanation: The formula compounds the daily return over 365 days to calculate the equivalent annual return.

3. Importance of Return Conversion

Details: Converting daily returns to annual equivalents allows for meaningful comparison of investment performance across different assets and time periods, helping investors make informed decisions.

4. Using the Calculator

Tips: Enter the daily return rate as a decimal (e.g., 0.001 for 0.1%). The calculator will compute the compounded annual return.

5. Frequently Asked Questions (FAQ)

Q1: Why use 365 days instead of 252 (trading days)?
A: This calculator uses 365 days for calendar year compounding. For trading days only, a different factor (typically 252) would be more appropriate.

Q2: Can this be used for negative returns?
A: Yes, the formula works for both positive and negative daily returns, showing the compounded annual effect.

Q3: How accurate is this conversion?
A: It's mathematically precise for the given daily rate, assuming consistent daily returns throughout the year.

Q4: What's the difference between annualized and annual return?
A: This calculates annualized return - what the return would be if the daily rate compounded for a full year.

Q5: Can I use this for monthly returns?
A: For monthly to annual conversion, you would use: Annual = (1 + Monthly)^12 - 1