US portfolio return 4.61 % The US Dollar was down 7.77% against the Canadian Dollar. The calculation is as follows ( 1 month ) : ((1+US Return)*(1+currency return)-1)=Canadian Return ((1.0461)*(1+(1+(-.0777)))-1) = -3.52% Do you guys agree with the method used above ? There must be a more accurate way of doing this …I don’t see how a postive 4.61 USD return could turn into a negative Cad return . This was not my calculation .
Rudeboi Wrote: ------------------------------------------------------- > US portfolio return 4.61 % > > The US Dollar was down 7.77% against the Canadian > Dollar. > > The calculation is as follows ( 1 month ) : > > ((1+US Return)*(1+currency return)-1)=Canadian > Return > > ((1.0461)*(1+(1+(-.0777)))-1) = -3.52% > > Do you guys agree with the method used above ? Yup. You can also calculate it as 4.61% - 7.77% + 4.61%*-7.77% = -3.52% Which is (Portfolio Return in local currency) + (Local currency return in base currency) + (interaction: return in base currency of increase in portfolio value) > There must be a more accurate way of doing this > …I don’t see how a postive 4.61 USD return could > turn into a negative Cad return . Because you didn’t just lose money on the gain in USD, you lost it on the principal as well. You *do* get an overall negative return. You should be able to convince yourself by going through a full example: Say you invested CAD100 with the initial exchange rate at 1 CAD/USD. The US portfolio increases to USD104.61, and the exchange rate goes to 0.9223 USD/CAD (so down 7.77%). When you convert back to CAD, you get 104.61*0.9223 = CAD96.48 - you’ve lost CAD 3.52, or 3.52%. > This was not my calculation .
Thanks …that makes sense .