when calculating the annualized return for the Sortino ratio, why do we first calculate the geometric annual return, then take the 12th root and multiply it by 12.
I would have only calculated the geometric annual return but not done step 2 and 3.
thanks!
I also would like to know.
I think the difference is if somebody can explain the difference between compounded annual return and annualized return.
Step 1 is getting the compounded annual return. Step 2 and 3 is turning it into annualized return.