Historical Returns

The past performance of a security or index. Analysts review historical return data when trying to predict future returns, or to estimate how a security might react to a particular situation, such as a drop in consumer demand. Historical returns can also be useful when estimating where future points of data may fall in terms of standard deviations.

Looking at historical data can provide some insight into how a security or market has reacted to a variety of different variables, from regular economic cycles to sudden world events. Investors looking to interpret historical returns should keep one caveat in mind: you can't assume that the future will be like the past. The older the historical return data is, the more likely it is to be less useful when predicting future returns.