What is the word for the sum of percentage gains from different investments? [closed]

Let's say I have \$20. And I invested into two different stocks with \$10 amount to each. From first investment I gained 10% profit and from second 30%. After that, I have \$24.

My actual profit here is 20% (\$20 -> \$24). It is called 'portfolio's overall profit'

The sum of all percentage gains is 30% + 10% = 40%. Is there any word in the finance world to name that 40% - sum of all percentage gains?

• There is no word because that measurement is meaningless. Percentage gains cannot be added - they can be averaged but not added. – D Stanley Apr 20 '18 at 13:58
• You can calculate the ROI of each investment as well as the ROI of the entire portfolio but as D Stanley mentioned, averaging individual gains is meaningless. – Bob Baerker Apr 20 '18 at 17:10
• 'The sum of all percentage gains is 30% + 10% = 40%.' How on earth would this be a meaningful measurement? Imagine you have 100 investments, you could have thousands of percentage returns over a long timeline.... – quid Apr 20 '18 at 17:28

This isn't named because it doesn't represent any actual thing. Let's call it `X` though.

For example, let's say all investments return 10%. If you put \$20 into one investment and it returned 10%, then `X` is 10%. If you put \$1 each into 20 different investments, then `X` is 20 * 10% = 200%, even though the outcome is indistinguishable from the other scenario.

It's similar to how you can't look at a road trip and "add up the speeds" (e.g. 30 mph + 60 mph + 45 mph = ... ???) of the various segments you spent driving.

You might want to look at a weighted average which computes your return based on the proportion of your portfolio each investment represents.

30%+10%=40% makes no sense.

30%+10%=>20% average returns.

If you score 80% in subject A and 90% in subject B, then your score over two subjects is 85%, not 170%.

As mentioned in the comments, here I have assumed equal weights.

• The example silently assumes equal weight. – chirlu Apr 21 '18 at 12:28

Actually as Paresh mentioned, 30%+10%=40% actually does not make any sense out of context :)

Your calculation is actually a weighted average port folio return.

Say you have 300 and divide that into 'equal' parts of 100 each (call this 'ticket' size of an investment) and invest in 3 stocks, say A, B and C.

At the end of the financial year you see A has gained 10%, B 5% and C 7%. Your portfolio gain will be 1-'ticket size'*(.10+.05+.07)=portfolio gain. Where all investments have same weight because their 'ticket size' is same.

On the other hand, if you have invested unequal 'ticket sizes', then you have to multiply each of the return % with its weight and multiply by entire portfolio investment capital.

There is no specific term that I have come across, it is just weighted average portfolio return.