Expected Return Calculator
Calculate expected return using probability-weighted outcomes.
Enter up to 4 scenarios with probabilities and returns to find the probability-weighted average.
Expected return is the probability-weighted average of all possible outcomes. It tells you the return you should anticipate on average if you ran the same investment decision many times.
E(R) = p1 x r1 + p2 x r2 + p3 x r3 + …
Where p is the probability of each scenario (as a decimal) and r is the return in that scenario. The probabilities must sum to 1 (100%).
Example: a stock has three scenarios. A bull case (30% probability, +40% return), a base case (50% probability, +10% return), and a bear case (20% probability, -25% return).
E(R) = 0.30 x 40 + 0.50 x 10 + 0.20 x (-25) = 12 + 5 - 5 = 12%
This 12% is not what any individual scenario delivers — it is the expected value across all of them. That distinction matters. An investment with a 90% chance of returning 5% and a 10% chance of losing 100% has an expected return of -5.5%. The expected return is negative even though the most likely outcome is positive.
Expected return also shows up in the Capital Asset Pricing Model, where the market price of risk determines what you should expect from a given level of systematic exposure.
The limitation: expected value is a long-run concept. It says nothing about what happens on a single bet. A 50% chance of doubling your money and a 50% chance of losing everything has an expected return of 0% — but most people would not take that bet with money they cannot afford to lose.
Enter your scenarios below. Probabilities must add up to exactly 100%.