Weight possible returns by probability to find the expected return.
Please do not make financial decisions based on these results.
What is the Expected Return Calculator?
Weight possible returns by probability to find the expected return. To use the Expected Return Calculator, enter scenario 1 probability, scenario 1 return, scenario 2 probability, scenario 2 return, scenario 3 probability, scenario 3 return; it returns expected return, standard deviation, and shows them instantly as you type.
Comparing returns
To judge past performance use the average return calculator and the ROI calculator. For projects with several cash flows, the IRR calculator gives a single comparable rate, and the payback period calculator shows how long it takes to recover the cost.
How to use the Expected Return Calculator
- Fill in the fields. You will need Scenario 1 probability (%), Scenario 1 return (%), Scenario 2 probability (%), Scenario 2 return (%), Scenario 3 probability (%), Scenario 3 return (%). Use a rate of return you consider realistic; small changes compound into large differences. Fields marked optional can stay at zero.
- Read the result. The highlighted box gives the Expected return, and the cards below show Standard deviation. Tables and charts break it down further.
- Test other scenarios. Results update as you type. Change one value at a time to see what drives the answer, and press Reset to go back to the defaults.
Formula and how it works
Example with real numbers
Here is the Expected Return Calculator using the default values shown in the calculator above:
Inputs
| Scenario 1 probability (%) | 25 |
|---|---|
| Scenario 1 return (%) | 18 |
| Scenario 2 probability (%) | 50 |
| Scenario 2 return (%) | 7 |
| Scenario 3 probability (%) | 25 |
| Scenario 3 return (%) | -12 |
Results
| Expected return | 5% |
|---|---|
| Standard deviation | 10.79% |
With these inputs the calculator returns Expected return: 5%. Change any value in the calculator to see how the result moves.
What if you change one input?
Sensitivity check: raising Scenario 1 probability (%) from 25 to 30 (about 20% higher) and leaving everything else as in the example above changes the results like this:
| Result | Example | After the change | Change |
|---|---|---|---|
| Expected return | 5% | 5.9% | +18% |
| Standard deviation | 10.79% | 11.16% | +3.4% |
The input that moves the result most is the one to check twice. Change it in the calculator above to test your own case.
What the results tell you
The results panel of the Expected Return Calculator reports Expected return and standard deviation. Compare these figures while changing one input at a time, and use the related calculators below to look at the same situation from another angle.
Method and limits. This calculator applies the formula in the section above to your inputs, in your browser; nothing you enter is stored on our servers. Investment returns are not guaranteed. The result shows what the numbers you enter would produce, not what the market will do. It is for information, not financial, tax or legal advice.
Frequently asked questions
Does expected return guarantee a result?
No. It is the probability-weighted average of possible outcomes, not a promise.
Are investment returns guaranteed?
No. Real returns vary. Use these tools to compare scenarios, not to predict results.
What rate of return should I assume?
There is no guaranteed rate. Test a range of conservative and optimistic rates, and remember that fees and inflation reduce your real return.
Are the results guaranteed?
No. Results depend entirely on the numbers you enter and the formulas shown on this page. Please do not make financial decisions based on them alone; confirm important figures with a licensed professional.
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