How to Find a Stock Return Using the Adjusted Closing Price

by Madison Garcia

    A stock's adjusted closing price gives you all the information you need to keep an eye on your stock. You can use unadjusted closing prices to calculate returns, but adjusted closing prices save you some time and effort. Adjusted prices are already adjusted for stock dividends, cash dividends and splits, which creates a more accurate return calculation.

    Find an online or print resource that offers historical price tables for your stock. Many companies offer historical price data in the investor relations portion of their website, and finance websites also make data available to the public. Download the data for the period of time you're interested in or enter it manually into a spreadsheet program. You can record close dates at daily, weekly or monthly intervals -- whatever works best for your purposes.

    Most sources will give you a variety of data regarding the stock for each closing date. The only data you really need is the column of dates and a corresponding column for adjusted closing prices. Set up the spreadsheet so that the date and corresponding price are in descending order. For instance, if you're trying to find the monthly stock return from January 2009 to September 2009, list February data below January data.

    To calculate a monthly stock return, you'll need to compare the closing price to the month in question to the closing price from the previous month. The formula for percentage return is the current month's price minus last month's price minus one. For example, if the January 2009 stock price was $60 and the February price was $67, the return is 11.67 percent (67/60-1). Create a new column labeled "stock return" and perform the calculation for each month.

    Once you've calculated monthly returns, you can continue to analyze and play around with the stock return data. You can find the average return over the time period by summing each stock return and dividing it by the number of months in the time period. You can also find the standard deviation of the monthly returns to see how erratically the stock increases in value. If you own stock in multiple companies, you can use correlation functions and equations to discover how the stocks in your portfolio are correlated.

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    About the Author

    Based in San Diego, Calif., Madison Garcia is an educator and writer specializing in business topics. Garcia received her Master of Science in accountancy from San Diego State University.

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