We frequently receive questions about how Parqet's performance charts are calculated, and how different types of gains (realized and unrealized gains, as well as dividends) are reflected in the chart. Since the underlying logic is somewhat complicated, we'll explain the calculation in this blog post using some examples.

In general, calculating performance is quite simple: How has the value of your portfolio changed within a viewing period?

Your portfolio value is compared on a daily basis with the portfolio value at the beginning of the viewing period. We consider all transactions that took place within the time period. You can select the viewing period in the top right of your dashboard. (Note: Of course, we always start the calculation at the earliest on the date you bought your first stock.)

There are different types of performance calculation that consider different factors. Some investors prefer to compare only unrealized gains, while others include dividends and realized gains in the calculation.

Parqet gives you the option to adjust the performance calculation to your preference. We explain how the different types of gains differ here 👇

Unrealized Gains

Unrealized gains are price changes of your stocks in relation to the entry price. If you buy an Apple stock for €100 and it then reaches a value of €150, you've achieved an unrealized gain of €50. That means a performance of +50%.

The principle also applies to your portfolio: If it had a value of €5000 at the beginning of the year and reaches a value of €7500 today, you achieve an unrealized gain of €2500. This also results in a performance of +50%.

The whole thing naturally also works with red numbers.

Occasionally, however, you see large jumps in your graph - one day you had a performance of +50%, the next it's only +20%. How can that be?

Let's look at the first example again. You buy an Apple stock for €100 on January 1st.

The price rises, and on January 2nd the stock is worth €150. The invested capital is €100, you have an unrealized gain of €50 and a performance of +50%.

That went quite well, so you decide to buy another Apple stock at the current price of €150. The invested capital increases to €250 (2 shares, bought at €100 and €150).

Here's the key point: Your gains remain constant, so the ratio to invested capital now becomes smaller: €50 gain on €250 invested capital results in a performance of +20%.

When you then sell a share, we follow the FIFO (First in, First Out - interested readers look here and here) principle. So we calculate based on the values of the first share: The invested capital is reduced by €100, your unrealized gains become realized (more on this later). This brings us to a total invested capital of €150, unrealized gains of €0, and thus a performance of 0% again.

It gets more complicated with odd shares, different entry prices, longer time periods and larger portfolios, but the mathematical principle remains the same.

After selling your share, you now have a performance of 0%, but a realized gain of €50. Let's take a look at that.

Realized Gains

Realized gains occur when selling stocks. If you buy an Apple stock for €100 and then sell it for €150, you have a realized gain of €50 (minus taxes and fees, but we'll leave those out of our simplified calculation).

In the portfolio overview above the graph, realized gains are not calculated. However, if you click the "Include dividends and realized gains" checkbox, we'll show them to you in the performance graph (For a more detailed breakdown, look at the return table).

If you only see unrealized gains, the mentioned example leads to a shocking jump in the graph. Your +50% performance suddenly drops to 0%.

However, if you click the checkbox, the performance remains. The realized gains are added to the unrealized gains, your total gains are €50 again. In relation to the invested capital of €150, you've achieved a performance of +33.3%.

Dividends

The same applies to dividends. Assuming Apple pays you a dividend of €10 per share on January 5th. Your invested capital is €150, the sum of unrealized gains, realized gains and dividends is €60, and you achieve a performance of +40%.

You have the option to view the performance with dividends and realized gains, or to only view the unrealized gains. Click on the "Include dividends and realized gains" checkbox to do so.

Example Portfolio

To see the whole thing based on a real graph, we've provided an example portfolio for you. Since we're using real prices here, the values don't work out as nicely, but the correlation between activities and the graph is clearly visible.

Click here for the example portfolio.

Additional Information

A few useful pieces of information for understanding the graph:

• We need a base value of your portfolio to calculate your performance in a time period. If you select YTD, we look at the period from the beginning of the year. The base value is calculated here from the shares you own at that time, and the purchase and sale prices at which you traded your shares. Dividends and realized gains are not included. In the performance chart, this base value is represented with 0%.
• If you select "Since Purchase" as the viewing period or if the purchase of the first stock is after the beginning of the period, your base value is identical to your invested capital - i.e., your purchases on the first day.
• In the overview, we always show you the current value of the portfolio. The performance, invested capital, price gains and dividends depend on the viewing period. So we show you, for example, only the gains you were able to achieve in the viewing period (e.g., 3 months). Additionally, only unrealized gains are calculated, and your invested capital is reduced when you sell shares.

Of course, you can always reach out to us in the community if you have a question or need help!

Happy investing!