What does a scenario-weighted return tell you?

Research explainer · Published 22 September 2026

A scenario-weighted return combines possible outcomes with assumed probabilities. It makes a valuation argument explicit. Its reliability depends on the assumptions, the probabilities and the outcomes the analysis may have left out.

A worked example from our Slide report

The dated sample uses terminal share prices of $13.50, $30 and $45 with weights of 25%, 50% and 25%. Their weighted price is $29.625. Adding weighted assumed dividends of $0.49 gives $30.115. Relative to the $24.95 reference price, that is about 20.7% over two years.

Annualising that weighted outcome gives approximately 9.9%. This is the annualised return of the weighted outcome, not the probability-weighted average of the individual annualised scenario returns. Neither calculation is a complete risk adjustment.

What the figure leaves out

• The probabilities are judgments, not established frequencies.
• A bear scenario is not necessarily the worst possible loss.
• Different paths can lead to the same endpoint, with different drawdowns and liquidity risks.
• Costs, taxes and actual dividends can differ from assumptions.

Read the full dated Slide report and its original sources. These numbers explain that historical example; they are not a current forecast.