Definition:

1-month Performance refers to the percentage change in the value of an asset, investment, or portfolio over a one-month period. It is a short-term performance metric used to assess how well an investment has performed in the recent past.

Formula:

1-month Performance = ((Value at End of Month - Value at Start of Month) / Value at Start of Month) * 100

How to use the metric:

Investors and analysts use the 1-month Performance metric to gauge the short-term performance of an asset or portfolio. It helps in identifying trends, making quick investment decisions, and comparing the performance of different investments over the same period.

Limitations:

1-month Performance can be volatile and may not accurately reflect the long-term potential of an investment. It is susceptible to short-term market fluctuations and may not account for external factors affecting performance. Relying solely on this metric can lead to impulsive decision-making.

Applies to:

This metric is commonly used in industries such as finance, investment management, and stock markets where short-term performance tracking is crucial. It is applicable to stocks, mutual funds, ETFs, and other liquid assets.

Doesn't apply to:

Industries with long-term investment horizons, such as real estate or infrastructure, may not benefit from this metric due to the longer timeframes required to realize returns. Additionally, it may not be suitable for illiquid assets where monthly valuation is challenging.

Summary:

1-month Performance is a useful metric for assessing short-term changes in the value of an investment. While it provides quick insights into recent performance, it should be used in conjunction with other metrics to make informed investment decisions, considering its susceptibility to short-term volatility and market fluctuations.