Ex-Post: Definition, Calculation, and Uses What is ex-post? Ex-post (Latin for “after the fact”) refers to actual, realized results observed after an event. In finance, ex-post typically describes historical returns, yields, or performance—what an investment actually earned—rather than estimates or forecasts. Key distinctions
* Ex-post: realized, historical outcomes (actual returns, observed prices, earned income).
* Ex-ante: forward-looking estimates or expectations about future performance.
Why ex-post matters Ex-post data are used to:
Evaluate how investments or strategies actually performed.
Validate forecasting and risk models (backtesting).
Inform future decisions by comparing realized returns with expected returns.
Measure metrics like Value at Risk (VaR) based on historical performance. Explore More Resources
How to calculate ex-post return Formula:
(ending value − beginning value) / beginning value Example:
If a portfolio was worth $1,000 on Jan 1 and $1,050 on Mar 31,
ex-post return = (1,050 − 1,000) / 1,000 = 0.05 = 5% Explore More Resources
Include earned income (dividends, interest) in the ending value or add it to the numerator when calculating total return for the period. Common uses in analysis
* Performance attribution: Compare a portfolio’s realized return to benchmarks and decompose returns into contributions (e.g., sector exposure, security selection).
* Regression analysis: Regress portfolio returns against market index returns to estimate beta (market exposure) and alpha (manager value added or lost).
* Risk assessment: Use historical returns to estimate realized volatility and probabilistic loss measures like historical VaR.
* Model validation: Backtest forecasting models using data that became available after the forecast origin to assess accuracy.
Practical considerations
* Period selection: Ex-post measures can be computed for any horizon; they are commonly used for year-to-date (YTD) or quarterly reporting to show realized performance over a specific interval.
* Interpretation: Ex-post shows what happened, not what will happen. It is essential for evaluating past decisions and refining models, but it does not guarantee future results.
* Comparison with ex-ante: Use ex-post to assess how well ex-ante estimates matched reality and to improve forecasting and risk models.
Bottom line Ex-post analysis provides a factual record of past performance. It is a foundational tool for evaluating investment outcomes, validating models, attributing returns, and improving future decision-making by comparing realized results with expectations. Explore More Resources