3-Dimensional Annualized Return Chart

The annualized return is a measure of return that is used to compare long-term investments. Given two investments the one with the higher annualized return is preferable. For short-term investments annualized returns can be quite variable and have little meaning. But as the investment holding period increases, annualized returns stabilize.

Price Chart

The following price chart and Complete Trading Model (CTM) charts use Nasdaq monthly prices from 1993 through August 2003.

CTM Percent Return Chart

The CTM percent return chart shows the winners (green) and losers (red) for the period. Of the 7,503 trades 77 percent were winners and 23 percent were losers.

If you are unsure how to read the chart, see 3-Dimensional CTM Percent Return Chart for the Nasdaq

CTM Annualized Return

The first CTM annualized return chart is at the same perspective as its corresponding CTM percent return chart. The annualized return chart is laid out like the percent return chart with the same three axis.

The spikes along the diagonal result from short term trades.

Second Perspective

The second chart includes the same annualized returns as the first annualized return chart but appears in a different perspective. In this chart you can see that the annualized returns gradually decrease as the holding period increases.

Negative Returns

The third annualized return chart shows only negative annualized returns. They are concentrated in the area around the year 2000 peak. The negative returns regions appear as holes below the chart floor

See Stock Visualization Articles on buyupside.com for more visualizations and charts.

Related Articles:

2D and 3D Visualizations of Stock Gains and Losses
3-Dimensional Percent Returns Chart

Updated February 20, 2009.