what are historical returns 
historical returns are often associated with the past performance of a security or index such as the s p 500 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 spending historical returns can also be useful when estimating where future points of data may fall in terms of standard deviations understanding historical returnsanalyzing historical data can provide insight into how a security or market has reacted to a variety of different variables from regular economic cycles to sudden exogenous world events investors looking to interpret historical returns should bear in mind that past results do not necessarily predict future returns the older the historical return data the less likely it ll be successful at forecasting returns in the future a historical return for a stock index such as the s p 500 is typically measured from the open on january 1st to the market s close on december 31st to provide the annual return each year s annual return is compiled to show the historical return over several years investors can also calculate the average historical return i e a stock has returned an average of 10 per year for the past five years however it s important to note that an average historical return doesn t mean that the stock price didn t correct lower in any of those years the stock could have experienced price declines but in the other years when the stock price rose the gains more than offset the declines so that the average historical return was positive investors can calculate the historical return for any investment including the value of a home real estate mutual funds and exchange traded funds etfs which are funds containing a basket of various securities investors also use historical returns to measure the price performance of commodities such as gold corn wheat and silver 