How to Annualize a Quarterly Return

To annualize a quarterly return, you need to convert the quarterly return to an annual return. The formula for annualizing a quarterly return is:

(1 + quarterly return) ^ 4 - 1

Let's say you have a quarterly return of 3%. To annualize this return, you would use the formula above:

(1 + 0.03) ^ 4 - 1 = 0.1255 or 12.55%

This means that the quarterly return of 3% would translate to an annual return of 12.55%.

It's important to note that this formula assumes that the quarterly returns are independent and identically distributed. If there is significant volatility or correlation between the quarterly returns, this formula may not accurately reflect the annualized return.