Standard Deviation (Risk)
4.92%
Expected Return Calculator
Calculate weighted expected return and risk across three scenarios.
Expected Return
5.20%
Total Probability
100.00%
How to use the Expected Return Calculator
The Expected Return Calculator is free and runs entirely in your browser — no sign-up, and nothing you enter leaves your device. It opens pre-filled with a realistic example, so you can see how it works before replacing any figure with your own; the results update as you type. Press Calculate to refresh the result panel, or Reset to return to the example.
The inputs it asks for:
- Scenario 1 Probability — a percentage (enter 6 for 6%).
- Scenario 1 Return — a percentage (enter 6 for 6%).
- Scenario 2 Probability — a percentage (enter 6 for 6%).
- Scenario 2 Return — a percentage (enter 6 for 6%).
- Scenario 3 Probability — a percentage (enter 6 for 6%).
- Scenario 3 Return — a percentage (enter 6 for 6%).
The formula
It combines three scenarios into a probability-weighted average return, then measures the spread around that average — the standard deviation — as a proxy for risk:
Expected return = Σ (probability × return)
Variance = Σ probability × (return − expected)² · Risk = √Variance- probability
- each scenario's likelihood (should total 100%)
- return
- the outcome in each scenario
Expected return is the mean outcome, not the most likely one, and standard deviation treats upside and downside swings equally. For the figures to be valid the probabilities should sum to 100% — the calculator warns when they don't.
Worked example
Using the example values — Scenario 1 Probability 30%, Scenario 1 Return 10%, Scenario 2 Probability 50%, Scenario 2 Return 6%, Scenario 3 Probability 20%, Scenario 3 Return -4% — the Expected Return Calculator returns a Expected Return of 5.20%. It also reports Standard Deviation (Risk) (4.92%), Total Probability (100.00%).
Prefer your own numbers? Change any field above and this recomputes instantly.
Key terms
- Expected return
- The probability-weighted average of all scenario returns.
- Variance / standard deviation
- How far outcomes spread from the average — a common risk measure.
- Probability distribution
- The set of outcomes and their likelihoods.
Frequently asked questions
Is the expected return the most likely outcome?
No — it's the weighted average across scenarios. The actual result will be one of the scenarios; the expected value may not equal any single one of them.
Why measure standard deviation?
It quantifies risk as the spread of outcomes. Two investments with the same expected return can have very different standard deviations — the higher one is riskier.
Do the probabilities have to add to 100%?
Yes, for the math to be valid. If they don't, the weighted average is distorted; the calculator flags a total that isn't 100%.