Speedy Calculator

Expected Return Calculator

Finance Updated October 25, 2026

Quick answer

The expected return calculator works out the probability-weighted expected return of up to two stocks across up to four economic scenarios, with each stock's variance and standard deviation (risk).

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Total probability
— %
Stock A – expected return
— %
Stock A – standard deviation
— %
Stock B – expected return
— %
Stock B – standard deviation
— %
Stock A – variance
—

Expected return summarises what you can expect on average, and the standard deviation measures how far actual returns may stray from it. Comparing both helps judge whether a riskier stock offers enough extra return.

How to use the Expected Return Calculator

  1. Scenario 1 (boom) – probability
  2. Stock A return in scenario 1
  3. Stock B return in scenario 1
  4. Scenario 2 (normal) – probability
  5. Stock A return in scenario 2
  6. Stock B return in scenario 2
  7. Scenario 3 (recession) – probability
  8. Stock A return in scenario 3
  9. Stock B return in scenario 3
  10. Scenario 4 – probability
  11. Stock A return in scenario 4
  12. Stock B return in scenario 4

Results update as you type, and every field accepts the units shown in its menu.

How it works

Enter the probability of each scenario (they should add up to 100%) and each stock’s return in that scenario.

Tips

  • Use the nominal annual rate and pick the compounding frequency your bank or broker states.
  • Small differences in return or fees compound into large differences over decades.
  • Run the calculation with a cautious, a central and an optimistic return to see the range of outcomes.
  • Past returns do not guarantee future returns – nothing here is investment advice.

Common mistakes to avoid

  • Comparing an APR with an APY or effective rate.
  • Ignoring inflation, taxes and fees when judging a real return.
  • Entering a percentage as a decimal (5 instead of 0.05 is correct here).

Inputs explained

Field What to enter
Scenario 1 (boom) – probability In %
Stock A return in scenario 1 In %
Stock B return in scenario 1 In %
Scenario 2 (normal) – probability In %
Stock A return in scenario 2 In %
Stock B return in scenario 2 In %
Scenario 3 (recession) – probability In %
Stock A return in scenario 3 In %
Stock B return in scenario 3 In %
Scenario 4 – probability In %
Stock A return in scenario 4 In %
Stock B return in scenario 4 In %

What each result means

  • Total probability = [Scenario 1 (boom) – probability] + [Scenario 2 (normal) – probability] + [Scenario 3 (recession) – probability] + [Scenario 4 – probability]
  • Stock A – expected return = ([Scenario 1 (boom) – probability]×[Stock A return in scenario 1] + [Scenario 2 (normal) – probability]×[Stock A return in scenario 2] + [Scenario 3 (recession) – probability]×[Stock A return in scenario 3] + [Scenario 4 – probability]×[Stock A return in scenario 4])÷100
  • Stock A – standard deviation = sqrt(([Scenario 1 (boom) – probability]×([Stock A return in scenario 1] – [Stock A – expected return])^2 + [Scenario 2 (normal) – probability]×([Stock A return in scenario 2] – [Stock A – expected return])^2 + [Scenario 3 (recession) – probability]×([Stock A return in scenario 3] – [Stock A – expected return])^2 + [Scenario 4 – probability]×([Stock A return in scenario 4] – [Stock A – expected return])^2)÷100)
  • Stock B – expected return = ([Scenario 1 (boom) – probability]×[Stock B return in scenario 1] + [Scenario 2 (normal) – probability]×[Stock B return in scenario 2] + [Scenario 3 (recession) – probability]×[Stock B return in scenario 3] + [Scenario 4 – probability]×[Stock B return in scenario 4])÷100
  • Stock B – standard deviation = sqrt(([Scenario 1 (boom) – probability]×([Stock B return in scenario 1] – [Stock B – expected return])^2 + [Scenario 2 (normal) – probability]×([Stock B return in scenario 2] – [Stock B – expected return])^2 + [Scenario 3 (recession) – probability]×([Stock B return in scenario 3] – [Stock B – expected return])^2 + [Scenario 4 – probability]×([Stock B return in scenario 4] – [Stock B – expected return])^2)÷100)
  • Stock A – variance = [Stock A – standard deviation]^2

Example values

How the main result changes when Scenario 1 changes and everything else stays at the example values above:

Scenario 1 (boom) – probability (%) Stock A – expected return (%)
12.5 6.25
18.75 7.5
25 8.75
31.25 10
37.5 11.25
50 13.75

Formula

E(R) = Σ pᵢ × RᵢVariance = Σ pᵢ × (Rᵢ − E(R))²; standard deviation = √variance

Worked example

Inputs — Scenario 1 (boom) – probability: 25 %; Stock A return in scenario 1: 20 %; Stock B return in scenario 1: 30 %; Scenario 2 (normal) – probability: 50 %; Stock A return in scenario 2: 10 %; Stock B return in scenario 2: 12 %; Scenario 3 (recession) – probability: 25 %; Stock A return in scenario 3: -5 %; Stock B return in scenario 3: -15 %; Scenario 4 – probability: 0 %; Stock A return in scenario 4: 0 %; Stock B return in scenario 4: 0 %.
Results — Total probability = 100 %; Stock A – expected return = 8.75 %; Stock A – standard deviation = 8.93 %; Stock B – expected return = 9.75 %; Stock B – standard deviation = 16.07 %; Stock A – variance = 79.69.

Frequently asked questions

What is expected return?

The average return weighted by the probability of each outcome.

What does standard deviation tell me?

How spread out the possible returns are – a measure of risk.

Must probabilities add up to 100%?

Yes, the scenarios should cover all outcomes.

What formula does the Expected Return Calculator use?

E(R) = Σ pᵢ × Rᵢ.

Cite this calculator

Speedy Calculator. (2026). Expected Return Calculator. Speedy Calculator. https://speedycalculator.com/calculators/finance/expected-return/