Long/Short Return Calculator
The formula
What the long/short return tells you
Exactly what long/short return earned: total return, the annualised CAGR that makes it comparable, and the split between price gain and income.
Calculation: Total return = (sell + income − buy) ÷ buy; CAGR = ((sell + income) ÷ buy)^(1/years) − 1. Enter your inputs and every substitution is shown below the result.
Reading the result
Compare with the boring alternative over the same window — the verdict bands anchor to long-run market returns; income-heavy gains are usually steadier than price-only ones.
Rules of thumb: Long-run real equity return sits near 6–7 % nominal CAGR plus inflation; bonds run 2–4 points lower.
Limitations and best practice
Ignoring the timing of income (reinvested vs spent) can overstate a CAGR by a few tenths; dividends spent as cash belong outside the ending value.
This calculator gives an estimate based on standard formulas; it is not professional financial, medical, legal or engineering advice. Verify anything you plan to act on with a qualified professional and your own records.
Frequently asked questions
Why does CAGR differ from average yearly return?
Are taxes included?
Source & methodology
Time-weighted return arithmetic per CFA Institute conventions.
How Long/Short Return works — and what your result really means
Capital decisions deserve better than a gut feeling — this page gives you the arithmetic to defend one. Searchers land on a Long/Short Return page for three reasons — to plan, to compare options, and to check that somebody else’s arithmetic is honest. This tool serves all three, and everything after the calculator explains the model instead of hiding it.
A calculation like this one is worth roughly as much as a careful sentence: it forces several vague considerations into one comparable quantity. Once Long/Short Return is on the table, the argument can stop being about impressions.
The number itself is the easy part. What takes judgement is knowing which inputs are facts in your situation and which are guesses wearing a decimal point — a distinction this page makes explicit for every field above.
Nothing below is stock text pasted around a number: the worked example computes total return = -25.92% from this tool’s own defaults, and the sensitivity section ranks the inputs that move the result — Buy price / invested first, at ≈31.8 % of the headline for a ten-percent error either way in that input — which is the thread the rest of this guide pulls on.
Every input in Long/Short Return, and what it does to the answer
Here is the complete model this tool runs — Total return = (sell + income − buy) ÷ buy; CAGR = ((sell + income) ÷ buy)^(1/years) − 1 — with each input explained below. If a competitor’s page gives you a different answer from the same inputs, this is the text that settles which of you is right.
Buy price / invested ($) (example value 18,500) is a quantity rather than a category — precision here is cheap and worth having. Keep every money input in the same currency; mixing systems quietly corrupts the comparison.
Sell price / value now ($) (example value 13,250) is a numeric input whose unit is fixed by the label; a wrong unit is a wrong answer wearing a plausible disguise. If your source quotes a figure before and after some deduction, decide which one the formula wants and be consistent for every field.
Holding period (years) (example value 6) is a quantity rather than a category — precision here is cheap and worth having. If the period is partial, decide whether you mean elapsed or planned time and keep that meaning across every field.
Income received over the hold ($) (example value 455) is a numeric input whose unit is fixed by the label; a wrong unit is a wrong answer wearing a plausible disguise. If your source quotes a figure before and after some deduction, decide which one the formula wants and be consistent for every field.
Long/Short Return on the example inputs: the complete substitution
Rather than describe the calculation, here it is end to end — every substitution in order, starting from the inputs above. Starting figures: Buy price / invested ($), Sell price / value now ($), Holding period (years), Income received over the hold ($). Run to the end, the total return resolves to -25.92% — Negative over the hold — the annualised figure below sizes the bleed on the bands this tool uses.
- Ending value incl. income = $13,250.00 + $455.00 = $13,705.00
- Total return = (13,705.00 − 18,500.00) ÷ 18,500.00 = -25.92 %
- CAGR = (13,705.00 ÷ 18,500.00)^(1/6.0) − 1 = -4.88 % a year
Annualised (CAGR) — -4.88%. Compare it against the main result of -25.92% before drawing conclusions.
Net profit — $-4,795.00. This is the number experienced users quote when the headline alone would mislead.
Value multiple — 0.74 ×. Read next to the headline, this is the figure that shows the shape of the trade-off.
Income share of gain — 0.0%. Compare it against the main result of -25.92% before drawing conclusions.
Keep this worked example open while you enter your own figures: matching the shape of the substitution is the fastest way to spot a unit or convention mistake.
The Long/Short Return corridor: your result across a realistic band
The honest version of any estimate is a corridor, and this one is cheap to produce: Long/Short Return was recomputed at 5 points along the dominant input, with every other field left untouched.
| Buy price / invested setting | Total return |
|---|---|
| 80 % of the example value | -7.40% |
| 90 % of the example value | -17.69% |
| example inputs | -25.92% |
| 110 % of the example value | -32.65% |
| 120 % of the example value | -38.27% |
That spread — -38.27% at the low end, -7.40% at the high — is what a careful read of Long/Short Return looks like: a band you can state out loud, with the reason for each edge. Reproduce it in the form above by editing Buy price / invested alone; the substitution steps will follow your figures exactly.
The levers behind Long/Short Return, ranked by effect
This list was computed for this specific engine just now: each numeric input was nudged ±10 % while every other field held its example value, and the total return was recalculated from scratch. It is the fastest honest answer to “what matters most in Long/Short Return?” — and it is specific to these defaults, because sensitivity moves with the starting point.
- Buy price / invested: ten percent up gives -32.65%, ten percent down gives -17.69% — ≈31.8 % of the total return either way
- Sell price / value now: ten percent up gives -18.76%, ten percent down gives -33.08% — ≈27.6 % of the total return either way
- Nudge Income received over the hold by ±10 % and Long/Short Return lands between -26.16% and -25.67% (sensitivity ≈0.9 %)
Buy price / invested is the dominant lever here: ten percent either way moves the result by about 31.8 %, from -32.65% to -17.69%. Spend your verification effort there first, and treat Sell price / value now as the second priority (≈27.6 % per ten percent). The remaining fields can sit at safe defaults without materially changing the answer — knowing which is which is what separates a careful calculation from an anxious one.
Is your Long/Short Return good — reading the result bands
A number on its own is trivia; a number against a range is intelligence. On the example inputs the band reads “Negative over the hold — the annualised figure below sizes the bleed”; your own figures place you on a different rung of the same ladder. The sensitivity list shows how far a modest input error moves you along that ladder: for Buy price / invested, ±10 % covers -32.65% to -17.69%. The practical reading rules: compare against your own history before comparing against other people; treat band boundaries as zones, not walls — one point on the wrong side of a threshold rarely changes a real outcome; and when a companion output contradicts the headline, believe the pair.
Compared with charting sites, this page explains the formula rather than hiding it — the goal is a number you can defend in a meeting, not just display.
The errors that quietly break a Long/Short Return figure
Ignoring the timing of income (reinvested vs spent) can overstate a CAGR by a few tenths; dividends spent as cash belong outside the ending value. This calculator gives an estimate based on standard formulas; it is not professional financial, medical, legal or engineering advice. Verify anything you plan to act on with a qualified professional and your own records.
Reading Long/Short Return as a promise rather than a conditional. Every number here is of the form “if these inputs, then this result”; when an input moves, the honest response is to recompute rather than to defend the old figure.
This model has its own particular trap: Buy price / invested carries ≈31.8 % of the response per ten percent of error, so effort spent elsewhere is largely decorative.
Another is comparing across contexts: a Long/Short Return computed with one set of conventions should never be lined up against a figure computed with another. Check the inputs behind both before ranking them.
Six things to confirm before acting on Long/Short Return
- Compare the output against one published benchmark or a colleague’s independent estimate.
- Recompute once with the dominant input deliberately set low, and see whether the decision changes.
- Check Buy price / invested before anything else: it is the measured dominant input, ≈31.8 % of Long/Short Return per ten percent.
- Note the date and the inputs beside the number so the figure can be audited later.
- Verify each input against its original source document, not memory.
- Run the ±10 % stress on the top two levers and check that your conclusion survives both.
Step by step: getting a trustworthy Long/Short Return out of this tool
The tool does the arithmetic; the routine below is what makes the arithmetic trustworthy. Five steps, a minute total — and afterwards you will know not just what the number is, but which assumption produced it.
Step 1 — one document, one pass. Open the statement, label or record that holds buy price / invested ($), sell price / value now ($), holding period (years), income received over the hold ($) and transcribe straight into the form. Transcription from a single source removes the mismatch errors that appear when figures are assembled from three different places. The inputs are the part of the work that nobody else can do for you.
Step 2 — baseline before exploration. Get one defensible Total return on screen before you start nudging numbers. Without a baseline, every variation looks interesting and none of them means anything. Say the answer out loud before you save it; if it sounds wrong, the model did not change, your understanding did.
Step 3 — isolate your variables. Change one field, observe, revert. The live sensitivity list does the ranking for the default inputs; verify it against your own, because dominance shifts when the starting point shifts. Write the assumptions in the same file as the result, and future arguments take minutes instead of meetings.
Step 4 — stress before you commit. A decision that survives a ten-percent squeeze on its two biggest inputs needs no luck to be sound. One that does not survive is a decision about hope, not about arithmetic. A figure with a date beside it becomes evidence; without one it stays an anecdote.
Step 5 — record the context, not just the number. Note today’s date and the inputs alongside the -25.92% output. Six months from now the context is what turns this figure into a trend. Write the assumptions in the same file as the result, and future arguments take minutes instead of meetings.
Where Long/Short Return matters in practice
Numbers earn their keep in conversations, and Long/Short Return is no exception. In Investing & Markets discussions around Alternative Investments, this figure decides whether an option stays on the table: it converts an opinionated debate into an arithmetic one, and arithmetic is the only referee both sides accept. Comparisons are cheap: run the identical calculation for the alternative and look at the gap.
The companion outputs — Annualised (CAGR) and Net profit — exist for the second stage of that screen: the headline sizes the prize, while the companions describe the trade-off you are accepting to get it. Re-running a number costs seconds; retracting a decision costs considerably more.
There is a personal-administration use people overlook: periodic self-checking. Long/Short Return quietly drifts as life changes — rates move, bodies change, costs compound — and re-running it a few times a year catches drift while correction is still cheap. Estimates improve most when the worst case is written down in ink.
People also ask about Long/Short Return
What affects Long/Short Return the most?
The short answer: Buy price / invested. The longer answer is the sensitivity table on this page, where every numeric input was probed by ten percent and the total return recalculated — Buy price / invested moved it furthest, by roughly 31.8 % (-32.65% to -17.69%).
Which matters more: sell price / value now or buy price / invested?
Buy price / invested, by a factor of about 1.1. Concretely: ten percent on Buy price / invested is worth ≈31.8 % of Long/Short Return, the same nudge on Sell price / value now only ≈27.6 %. That ranking is re-computed for each page from that page’s own defaults.
What is a typical Long/Short Return?
There is no honest universal average for Long/Short Return, but there is a reference point: the defaults on this page produce -25.92% (Negative over the hold — the annualised figure below sizes the bleed). Replace the inputs with your own and compare — that comparison is the useful meaning of “typical”.
How do I calculate Long/Short Return by hand?
Three steps: write the formula (Total return = (sell + income − buy) ÷ buy; CAGR = ((sell + income) ÷ buy)^(1/years) − 1), insert your values, and simplify. The worked example section shows exactly that chain for the default inputs; replicating it once on paper teaches you more about Long/Short Return than any number of calculator runs.
What happens to Long/Short Return if buy price / invested changes by 10 %?
On these inputs a ±10 % change in buy price / invested takes Long/Short Return to -32.65% against the -25.92% example — around 31.8 % of the headline. The same test on every other field is in the sensitivity section.
Is the Long/Short Return result of -25.92% good or bad?
The tool answers “what”, not “whether”: -25.92% carries the verdict “Negative over the hold — the annualised figure below sizes the bleed” for the default case, which is a starting interpretation rather than a verdict on your situation. Re-run with your own figures and compare the bands.
How do I calculate Long/Short Return manually?
Write down the inputs, then follow the printed steps in order — Total return = (sell + income − buy) ÷ buy; CAGR = ((sell + income) ÷ buy)^(1/years) − 1. A spreadsheet replicates it with two or three cells. The manual route is worth doing once to build intuition; after that the calculator saves time and eliminates transcription slips.
Does Long/Short Return account for fees and taxes?
Only what you put in. Fees belong inside Buy price / invested ($) where they shrink returns before compounding touches them; taxes are outside the scope of a pre-tax Long/Short Return and should be layered on top before decisions.
Why does CAGR differ from average yearly return?
CAGR compounds — it is the single steady rate that turns the start into the end, while arithmetic averages flatter volatile paths.
Are taxes included?
No, this is the pre-tax picture; subtract tax drag on gains and income before comparing with a tax-sheltered alternative.
Is my data private on this page?
Yes — computation happens locally in your browser, with no account, no tracking of your inputs and nothing sent to a server. The printed formula is the whole story of what happens to your figures.
What the labels on this page mean
- Annualised (CAGR)
- -4.88% for the Long/Short Return worked case; it sits next to the main result because it carries context the headline leaves out.
- Net profit
- $-4,795.00 in the default Long/Short Return calculation — one of the secondary figures an experienced reader checks before trusting the primary number.
- Value multiple
- 0.74 × in the default Long/Short Return calculation — one of the secondary figures an experienced reader checks before trusting the primary number.
- Total return
- The primary output of this tool: -25.92% for the default inputs, computed exactly from Total return = (sell + income − buy) ÷ buy; CAGR = ((sell + income) ÷ buy)^(1/years) − 1.
- Worked example
- Every substitution in order, from the example inputs to -25.92% — the audit trail for the headline figure.
- Verdict band
- A named zone on the range of plausible results; the example inputs land in “Negative over the hold — the annualised figure below sizes the bleed”, and your inputs may not.
- Sensitivity (±10 %)
- How far the Long/Short Return moves when a single input is nudged ten percent either way; the ranked list on this page is computed live from this engine.
Method, sources and what this tool cannot tell you
Everything above runs on one stated formula, applied without hidden coefficients: Total return = (sell + income − buy) ÷ buy; CAGR = ((sell + income) ÷ buy)^(1/years) − 1. Source of record: Time-weighted return arithmetic per CFA Institute conventions. Any other implementation of this model should return the same figure for the same inputs. If one does not, the difference is in its assumptions — which this page prints and that one probably does not.
Nothing here replaces a qualified professional, and nothing here is approximate either — the arithmetic is exact, and the honesty is in the inputs you supply. Nothing is smoothed, weighted or adjusted behind the scenes; where judgement enters, this page says so and names the input responsible.
What to do with your Long/Short Return next
Pair this figure with the companion outputs above — the headline sizes the prize, the companions describe the risk.
This page was written for investors and founders comparing opportunities on equal terms, and the promise is that nothing above required trust. Bookmark the tool, re-run it whenever an input moves by more than a few percent, and keep the date with the number.