Stock prices change on a daily basis, altering the value of your investments. You may calculate daily stock returns to monitor the magnitude of this change. The daily return measures the dollar change in a stock’s price as a percentage of the previous day’s closing price. A positive return means the stock has grown in value, while a negative return means it has lost value. A stock with lower positive and negative daily returns is typically less risky than a stock with higher daily returns, which create larger swings in value.
Pay Attention to Prices
Although you can calculate your daily value manually, you may find over time that the process gets tedious. There are online stock calculators that will help you determine the daily return on each of your stocks. This will save you time that you can put toward more important endeavors. However, if you prefer the do-it-yourself method, it merely requires a few calculations.
Determine Stock Value
Before you can get started, you'll first need to know exactly what your stock is worth on a given day. Start by visiting a financial website that provides stock price information. Once you're on that site, type a company’s name or its stock’s ticker symbol into the text box required to search for stocks. Click the search button next to the text box to bring up its information. A ticker symbol consists of one or more capital letters and is an abbreviation of the company’s name or something related to its business.
Find in the historical prices section the stock’s closing price for any two consecutive days. For example, assume a stock’s closing price was $36.75 yesterday and that its closing price was $35.50 the previous day. Subtract the previous day’s closing price from the most recent day’s closing price. In this example, subtract $35.50 from $36.75 to get $1.25.
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Calculate Daily Return
Divide your Step 4 result by the previous day’s closing price to calculate the daily return. Multiply this result by 100 to convert it to a percentage. Continuing with the example, divide $1.25 by $35.50 to get 0.035. Multiply 0.035 by 100 to get a 3.5 percent return for that day. This means that the stock’s price increased by 3.5 percent over the previous day’s closing price.
Calculate a stock’s daily returns over a period of time, such as one year, to understand how much its price moves on an average day and the range of daily returns.