Calculation Error Tracking
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Finance Trading Q4 Special Report Small Business Back to School Reference Dictionary Term Of The Day Martingale System A tracking error formula money management system of investing in which the dollar values of tracking error calculation excel investments ... Read More » Latest Videos Why Create a Financial Plan? John McAfee on the information ratio calculation IoT & Secure Smartphones Guides Stock Basics Economics Basics Options Basics Exam Prep Series 7 Exam CFA Level 1 Series 65 Exam tracking error calculation example Simulator Stock Simulator Trade with a starting balance of $100,000 and zero risk! FX Trader Trade the Forex market risk free using our free Forex trading simulator. Advisor Insights Newsletters Site Log In Advisor Insights Log In Tracking Error Next video: Loading the player... Tracking error is the
Tracking Error Definition
difference between the return on a portfolio or fund, and the benchmark it is expected to mirror (or track). There are two ways to calculate the tracking error. The first is the easiest. Simply subtract the fund’s return from the return of the index it is supposed to track. For instance, a mutual fund that is pegged to the S&P 500 had a 7% return for the year, whereas the S&P had an 8% return. The tracking error is 1%. The second way to calculate the tracking error is more complicated, but more informative. This calculation involves taking the standard deviation of the difference in the fund’s and index’s returns over time. The formula is: Standard deviation of tracking error = 1/(n - 1) Σ(xi - yi)2 Where n is equal to the number of periods, x equals the fund’s return for each given period and y equals the benchmark’s return for each period. By using the standard deviation calculation, investors get a better idea of how the fund will perform compared to the benchmark ove
Finance Trading Q4 Special Report Small Business Back to School Reference Dictionary Term Of The Day Martingale System A money management system of investing
Standard Deviation Calculation
in which the dollar values of investments ... Read More »
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