1. Profit and Loss Analysis
Profit and Loss Analysis consists of three modules:
1. My Earnings
2. P&L Calendar
3. Profit and Loss Distribution.
Currency switching and filtering options are available for clients to analyse their profit and loss in different scenarios and categories. When selecting different filtering criteria, the display of each module on the page will also change accordingly.
2. Daily Cut-Off Time For Profit and Loss Calculation
Profit and loss calculation is based on the daily cut-off time at 08:00 SGT (09:00 SGT during Daylight Saving Time). For example, the profit and loss between 20:00 on T-1 day and 08:00 on T day is considered as the profit and loss for T day.
3. My Earnings
My Earnings consists of profit and loss information and trend charts. The profit and loss information will be displayed based on the client's filtering conditions. User can choose to display trend chart in terms of Yield, P&L or Net Account Value.
3.1 Trend Chart Explanation
The information displayed in the trend chart is linked to the client's filtering conditions. It supports the display of three data trends: Yield, P&L or Net Account Value. The x-axis of the trend chart represents time, while the y-axis represents the corresponding data for the selected type of trend chart.
(1) Yield Trend: The x-axis represents time, and the y-axis represents the Yield. Clients can select a time period and the trend chart will display the cumulative yield during the same period. On the left side of the trend chart, clients can select different market indices for comparison.
(2) Profit and Loss Trend: The x-axis represents time, and the y-axis represents the cumulative profit and loss amount. Clients can select a time period and the trend chart will display the profit and loss amount during the same period.
(3) Net Account Value Trend: The x-axis represents time, and the y-axis represents the net asset value. Clients can select a time period and the trend chart will display the net account value during the same period. If there is a non-trading day, it will be equal to the net asset value of the previous trading day.
4. Yield Calculation Formula
Webull provides three different methods for calculating the yield, which are explained below.
4.1 Simple-Weighted Yield
The simple-weighted yield is calculated as the cumulative return over a period divided by the initial net assets plus the net inflow during the period. The cumulative return is calculated as the ending net assets minus the initial net assets minus the net inflow during the period.
The simple-weighted yield takes into account the net inflow of funds and stocks, but both are considered to occur at the beginning of the period. When there are more significant inflows and outflows of funds, it may result in an underestimation of positive returns and an overestimation of negative returns, making it less accurate.
4.2 Time-Weighted Yield
The time-weighted yield is calculated as [(1+R1)*(1+R2) … *(1+Rn)-1]*100%, where R is the daily return divided by the initial net assets plus the daily net inflow. The daily return is calculated as the ending net assets minus the starting net assets minus the daily net inflow.
The time-weighted yield considers the time value of money and can be understood as the compound return earned on an initial investment of 1 unit until the end of the period. It calculates the cumulative return from the beginning to the end by calculating the daily return. This method helps to mitigate the impact of cash flow changes on returns to a certain extent. However, this method treats the daily returns equally without considering the investment amount weights, which may result in calculating positive returns even when the user incurs losses, leading to a possible inconsistency between the sign of the return and the period return.
4.3 Cash-Weighted Yield
The cash-weighted yield is calculated as the cumulative return over a period divided by the adjusted initial net assets. The cumulative return is calculated as the ending net assets minus the initial net assets minus the net inflow during the period. The adjusted initial net assets are calculated by adding the weighted daily net inflows to the initial net assets.
The weight of the daily net inflow is calculated as the number of days the cash flow remains in the period divided by the total number of days in the period. For example, if the calculation period is 100 days and there is a cash inflow of 200 units on the 20th day, the weight of that day's cash inflow would be (100-20)/100 = 0.8, which means that the 200 units would be considered as 160 units that remained throughout the entire calculation period.
The cash-weighted yield considers the net inflow of funds and stocks and takes into account the impact of different position weights during different time periods. It can calculate both positive and negative returns accurately, allowing for negative returns during loss periods and positive returns during profitable periods.
For example,
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