Expected Return Calculator

Written by Great Medico

Updated September 25, 2026 •2 min read

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Expected Return Calculator is most useful as a scenario tool: change one assumption at a time and watch how the modeled return, value, rate, or risk measure responds.

What this calculator does

Expected Return Calculator calculates probability-weighted expected return from the entered scenario returns and their probabilities. It uses only the information collected by this interface; costs, taxes, rates, market data, or operating assumptions that are not shown are not silently added to the result.

How to use it

Enter Scenario returns (%) and Scenario probabilities (%). Keep percentage assumptions in the units shown on the form and make sure the time unit of rates matches the term or period count. Before using the result in a decision, recheck unusually large or negative values against the source data rather than assuming the calculator is correcting an inconsistent input.

How the calculation works

Expected return = Σ(probability × scenario return). The probabilities are converted from percentages to weights and should total 100%; the weighted average is the model’s expected return for the listed scenarios.

Example

For returns of -10%, 8%, and 22% with probabilities 20%, 50%, and 30%, the weighted expected return is 8.6%.

How to interpret the result

Interpret the result as a modeled finance quantity, not a forecast or recommendation. Returns, rates, correlations, cash flows, fees, taxes, and market prices can change, so the most useful practice is to test a range of plausible inputs rather than treating one scenario as certain.

Limitations and notes

A weighted average can hide a very wide range of outcomes. The current version uses one return series with scenario probabilities; it does not model a second stock, correlations, path dependence, or tail events. Probabilities should be plausible and should total 100%. Expected return is an average across the supplied scenarios, not the return most likely to occur; dispersion and downside risk need separate measures.