METRICS
Performance metrics
CAGR and max drawdown — the same two numbers on every asset.
Every asset curve is summarized by two headline numbers, computed the same way regardless of asset type. CAGR is the smoothed yearly growth from the first month's value to the last. Max drawdown is the deepest peak-to-trough fall along the way. Both are read straight off the value curve you see in the chart — no separate model.
How it works
01
CAGR smooths the whole curve into one yearly rate.
We take the value at the very first month and the value at the very last month, find the total growth ratio between them, then spread that growth evenly across the number of years. The result is the constant yearly rate that would have taken you from start to finish.
02
Max drawdown measures the worst fall, not the final result.
Walking month by month, we track the highest value reached so far (the running peak). At each month we measure how far below that peak the curve has dropped. The largest such drop over the whole period is the max drawdown.
The equation
CAGR = ( V_last / V_first )^(1 / years) − 1
MDD = maxₜ ( ( peakₜ − Vₜ ) / peakₜ )
V_firstthe asset's value at the first month of the curve
V_lastthe asset's value at the last month
yearslength of the curve in years
Vₜthe value at month t
peakₜthe highest value reached up to and including month t
What you get back
CAGRA smoothed annual growth rate for the value curve. Reported as a decimal (0.125 = 12.5%).
Max drawdown (MDD)The largest peak-to-trough decline over the curve. Reported as a decimal (0.345 = 34.5%).
NOTECAGR is anchored to the first month's value only. When most of your money arrives later through monthly contributions, the curve grows off a small starting base, so CAGR reads higher than your true per-year return — lead with total profit and simple return for an honest headline.
Assumptions
- 01Both metrics are read from the same monthly value curve used everywhere else — no resampling.
- 02CAGR uses the first and last points of the curve only; intermediate ups and downs do not change it.
- 03CAGR returns 0 when the initial value is ≤ 0 or the final/initial ratio is negative (underwater).
- 04Max drawdown is measured against the running peak from the start of the curve.
- 05Values are rounded to four decimal places.
Key terms
CAGRCompound Annual Growth Rate — the constant yearly rate that links the first and last values of the curve.
Max drawdown (MDD)The worst peak-to-trough decline over the period, as a fraction of the peak.
PeakThe highest value the curve has reached up to a given month.
What it is — and isn't
- ✓Both numbers are computed directly from the same value curve shown in the chart.
- ✓The method is identical across stocks and real estate, so the numbers are comparable.
- ✗CAGR is undefined when the curve starts at or below zero, or ends below zero — in those cases it is reported as 0.
- ✗No risk-adjusted metric (volatility, standard deviation, Sharpe) is computed — only growth and worst-case drop.
- ✗Max drawdown describes the past path of this exact curve; it is not a forecast of future risk.
FAQ
Why is my CAGR higher than my simple return?
CAGR is measured against the first month's value. If you added money over time, the curve started from a small base and grew as contributions arrived, which inflates the per-year rate. Simple return (profit ÷ total contributed) is the more honest headline for a contribution plan.
Why does CAGR show 0 when I clearly lost money?
If the final value is below zero (a leveraged position underwater) or the starting value is zero, the math behind CAGR has no real answer, so we report 0 rather than a misleading number. Read total profit instead.
Is max drawdown the same as my final loss?
No. Max drawdown is the worst dip along the way, even if the curve recovered afterward. You can finish in profit and still have had a large drawdown mid-way.
Source series
Audit log
v1.0Jun 27 2026First metrics methodology page, written from the actual CAGR/MDD engine functions.