I've been looking at the TWRR Daily Valuation method and I'm trying to understand how to break the total performance period into sub-periods when there are irregular cash flows.
As the article explains:
The Daily Valuation Method breaks the total performance period into sub-periods, the boundaries of which are based on the occurrence of cash flows.
In particular they show the following example:
In the case that I'm trying to apply the formula, there are multiple cash flows whose size and occurrence are at irregular periods:
- Deposits (in)
- Withdrawals (out)
- Loan received (in)
- Loan payments (out)
- Investments (out)
- Returns on investments (in)
The formula implies that the periods are not uniform, but irregular and dependent on the time of the cash flow. If the periods are based on the cash flows, then how does one handle multiple cash flows per day?