Definition:

1-day Performance refers to the percentage change in the value of a financial asset, such as a stock, bond, or index, over a single trading day. It provides a snapshot of how the asset performed from the previous day's close to the current day's close.

Formula:

1-day Performance = ((Closing Price Today - Closing Price Yesterday) / Closing Price Yesterday) * 100

How to use the metric:

Investors and traders use 1-day Performance to quickly assess the daily movement of an asset's price. It helps in identifying short-term trends and can be a useful tool for day traders looking to capitalize on daily price fluctuations.

Limitations:

1-day Performance can be volatile and may not accurately reflect the long-term potential or stability of an asset. It is susceptible to daily market noise and external factors, such as news events, which can cause significant price swings.

Applies to:

This metric is commonly used in industries with highly liquid and volatile assets, such as equities, commodities, and foreign exchange markets, where daily price movements are significant.

Doesn't apply to:

1-day Performance is less relevant for industries with illiquid assets or those that do not experience frequent trading, such as real estate or private equity, where daily price changes are not readily observable or meaningful.

Summary:

1-day Performance is a metric that measures the daily percentage change in the price of a financial asset. While useful for assessing short-term price movements, it is limited by its susceptibility to daily volatility and market noise, making it more applicable to liquid and volatile markets.