Description
Subtract reference return from asset return and multiply the premium by portfolioWeight.
A simple return is a change relative to an initial value, while a gross return is a wealth multiplier and a log return uses a logarithm of that multiplier. Dividend, split, fee and currency conventions change what is included.
Subtract reference return from asset return and multiply the premium by portfolioWeight.
When to use this tool
Use Risk Premium Contribution when you need a stated return-basis conversion or contribution.
How to use the tool and how it works
- Enter assetReturn, referenceReturn, portfolioWeight. Use the units and conventions below.
- Run the tool. Correct any format, range, or cross-field input error before interpreting the output.
- Read premium, weightedContribution. Use the output convention below.
Subtract reference return from asset return and multiply the premium by portfolioWeight.1
| Input field | Meaning and units | Accepted input |
|---|---|---|
| assetReturn | Asset Return | Required. Finite number. |
| referenceReturn | Reference Return | Required. Finite number. |
| portfolioWeight | Portfolio Weight | Required. Finite number. |
| Output field | Interpretation | Returned shape |
|---|---|---|
| premium | Premium | Required. Finite number. |
| weightedContribution | Weighted Contribution | Required. Finite number. |
{
"input": {
"assetReturn": 0.1,
"referenceReturn": 0.02,
"portfolioWeight": 0.5
},
"output": {
"premium": 0.08,
"weightedContribution": 0.04
}
}Limitations and assumptions
- Returns share a horizon and fractional basis. Weight may be signed or leveraged; one contribution does not measure complete portfolio performance or expected risk compensation.
- Inputs must satisfy both the field types and the cross-field conditions above. Invalid input causes an error; a successful false flag or documented placeholder is a different result.
- Numeric calculations use binary floating point unless exact decimal-integer arithmetic is explicitly stated. No hidden measurement tolerance or decimal rounding is added; nonfinite or out-of-contract results are rejected. Numeric signed-zero results are exported as zero.
Alternative or Complementary methods
Reconstruct the full investment cashflow and adjustment history for performance analysis. Align horizons, quote direction and numeric return scales, and include relevant fees and taxes explicitly.
References
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