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Start both series at a common index
The original comparison starts portfolio and benchmark wealth at 100 and uses one common period. Their ending values are 110 and 105. Both return measures use the same stated income and cost basis.
Compute the rate difference
The spread is 10%−5% = 5 percentage points. This is an additive difference between the two rate numbers. It does not divide the portfolio’s endpoint advantage by benchmark ending wealth.
Compute the relative endpoint factor
Relative wealth is 110/105 = 1.047619, so relative growth is 4.761905%. The difference from 5 points comes from using benchmark terminal wealth as the relative denominator.
| Measure | Denominator or operation | Result |
|---|---|---|
| Return spread | Difference of rates | 5 percentage points |
| Relative wealth growth | 110 / 105 − 1 | 4.761905% |
Match the label to the calculation
Both results can be useful when named precisely. Neither is a risk-adjusted appraisal or proof of benchmark suitability. For several periods, use linked factors for the relative-wealth question rather than summing periodic spreads.