# How is Multiple TWR figure for combined Multiple Portfolios calculated?

Hi
I have 2 different Portfolios monitored in Stockscafe, labelled VG1 and VG2. Both started with the same initial \$100k amts .
VG1 was started in beginning Dec 2020 with \$50k. And in Jan 2021 another \$50k was added. VG2 was started in beginning July 201 with \$100k.
As of now I saw under the Portfolio Report as stated for 2021 TWR

1. VG1 +11%
2. VG2 -16%

But when I combined both Portfolios to see the overall TWR the figure was +10% which I do not understand how it can be so. Esp also when the P&L is negative.

Could you pls explain how I should be viewing such a scenario correctly. I think my comprehending may be inaccurate. Thanks

Hi there,

Thank you for the question.

1. TWR definition → Returns Definitions (TWR and XIRR) - StocksCafe Academy

2. So, what happens when you combine the two portfolios. From Jan 2021, the TWR are computed solely based on VG1. And since VG2 is only started in July 2021, only from July 2021, the TWR will then be based on the holdings of the two portfolios.

3. You can check out this debug page for checking the computation details.

Cheers,
Evan

Thank you Evan for your reply. I did go through the links before posting the question but still didnt quite understand.

Are you able to tell me the formula that derives the final combined TWR of both VG1 and VG2 based on my description of the relevant time periods as well . That would be very helpful as it will explain how it will lead to it being +10%.

Thank you very much.

It is not really a formulae to combine both but what it does is from second trading day of the year, compute how the day change of the portfolio of combined VG1 and VG2. If one is missing then it will ignore. Then it repeat this for the whole and sum up using this equation → Overall TWR = [(1 + Day2_TWR) x (1 + Day3_TWR) x … x (1 + DayN_TWR)] – 1