R2 - A number between 0 and 100 indicating the proportion of changes in an index that affect a fund's performance. Any movement in the fund's external index benchmark can account for 100% of the movement of a fund with an R2 of 100.
Rally - An extended period of rising stock, bond, or related index prices. A rally typically entails significant upward movements that happen quickly or over a short period of time. This type of price movement can happen during either a bull or a bear market, when it is known as either a bull market rally or a bear market rally, respectively. A rally usually comes after a period of consolidation or declining prices. The counterpart is of a rally is a correction or market crash, which is a sharp decline in short-term prices.
Ratings - Evaluations of the credit quality of bonds usually made by independent rating services. Ratings generally measure the probability of timely repayment of principal and interest on debt securities.
Ratio analysis - Ratio analysis is a mathematical technique for getting insight into a company's liquidity, operational performance, and profitability by evaluating its financial documents such as the balance sheet and income statement. Ratio analysis is the foundation of fundamental equity analysis.
Real body (of a candlestick) - The wide portion of a candle on a candlestick chart is its actual body. The real body encompasses the space between the opening and closing prices over a specific period of time. The candle is green (or white) if the close is higher than the open for the specified period of time. The candle is red (or black) if the close is lower than the open for the specified period of time.
Realized gain - A realized gain occurs when an asset is sold at a price greater than its initial purchase price. It occurs when an asset is sold for more than its book value cost.
Realized loss - When an asset is sold for less than it was originally purchased for, a realized loss is a loss that is recorded. It occurs when an asset is sold for less than its book value cost.
Rebalancing - Rebalancing is the process of getting a portfolio's asset allocation values back to the levels specified by an investment strategy. These levels are meant to correspond with an investor's risk tolerance and potential rewards. Asset allocations are subject to adjustment over time as market performance affects asset values. Rebalancing is the process of regularly buying or selling assets in a portfolio to restore and maintain the initial, desired level of asset allocation.
Recession - A recession is a substantial, pervasive, and protracted decline in economic activity. One widely used guideline is that a recession is defined as two consecutive quarters of declining gross domestic product (GDP) in a nation. Recessions often run six months or longer, but they can last shorter periods as well.
Redemption - Sale of stock holding in a mutual fund by a shareholder.
Reinvestment option - A mutual fund's policy under which shareholders' dividends or capital gains distributions may be used to purchase new shares.
Relative strength index (RSI) - Technical analysis uses the relative strength index (RSI), a momentum indicator. to assess whether a security's price is overvalued or undervalued. RSI evaluates the speed and severity of recent price fluctuations. The RSI is shown as an oscillator (a line graph) on a scale from 0 to 100.
Relative risk and potential return - The possible return on an investment and the level of risk an investor willing to take associated with it.
Renewable Energy Certificates (RECs) - A market-based instrument known as a Renewable Energy Certificate (REC) verifies that the holder of the certificate owns one megawatt-hour (MWh) of electricity produced from a renewable energy source. The received REC can subsequently be sold on the open market as an energy commodity after the power provider has supplied the energy into the grid. Earned RECs may be sold, for instance, as a carbon credit to other polluting entities to offset their emissions. Green Tags, Tradable Renewable Certificates (TRCs), Renewable Electricity Certificates, and Renewable Energy Credits are some other names used for RECs.
Renko chart - A type of chart of Japanese origin that is constructed utilizing price movement rather than price and predefined time periods (daily, hourly, 15-minute...) as other charts do. Given that the chart resembles a collection of bricks, it is believed to have been named after the Japanese word for bricks, renga. Each block is positioned at a 45-degree angle (up or down) to the preceding brick, and a new brick is produced when the price changes by a predetermined amount. A usual color for an up brick is white or green, whereas a common color for a down brick is black or red.
Repurchase agreement - For dealers in government securities, a repurchase agreement (repo) is a type of short-term loan. In a repo, a dealer offers investors government assets for sale, typically overnight, and then buys the securities back the next day at a slightly higher price. The overnight interest rate is implicit in that modest price difference. Repos are often used to raise quick money. They are frequently used in open market operations by central banks as well. It is a repurchase agreement (repo) for the party purchasing the security and promising to sell it in the future; it is a reverse repurchase agreement (rrpa) for the party selling the security and promising to repurchase it in the future.
Reserve fund - A reserve fund is a savings account or other highly liquid asset placed aside by an individual or corporation to cover any costs or financial commitments in the future, particularly those that arise unexpectedly. Less liquid assets may be utilized if the fund is designed to cover the costs of planned renovations.
Resistance - Resistance, also known as a resistance level, is the level at which the price of an asset experiences pressure as it rises, due to the appearance of an increasing number of sellers who are eager to sell at that price. Resistance levels may be long-lasting or short-lived depending on whether new information surfaces and alters the market's perception of the asset as a whole. Drawing an horizontal line (and at times diagonal lines, known as trend lines) to connect the highs for the time period being considered, allows technical analysts to chart the resistance levels, and make a more accurate price projection. The counterpart of resistance is support.
Return on equity (ROE) - A financial performance indicator obtained by dividing net income by shareholders' equity. The return on equity (ROE) is known as the return on net assets since shareholders' equity is calculated as the sum of a company's assets less its debt.
Return on investment (ROI) - Return on investment (ROI) is a performance metric used to assess an investment's effectiveness or profitability, or to compare the effectiveness of several distinct investments. ROI aims to quantify the amount of return on a specific investment in relation to the cost of the investment.
Reversal - A reversal is a change in the direction that an asset's price is moving. Either an upward or downward reversal can happen. Following a significant price increase, a downward trend reversal could be expected. The opposite is true, that following a steep decline in price, a trend reversal could take place. Reversals usually don't depend on a single period or two bars on a chart; instead, they depend on the general price direction. Some indicators, like a moving average, oscillator, as well as support and resistance levels, such as trend lines, channels and other technical patterns, may be useful for identifying trends and reversals.
Reverse stock split - A corporate move aimed to reduce the number of existing shares of stock into fewer (higher-priced) shares. A reverse stock split, also referred as stock consolidation or stock merger, divides the existing total number of shares by a number. For example a 1-for-3 reverse split will give one share for every three shares that a qualifying shareholder owns, reducing the number of outstanding shares while increasing their price value by three folds. A stock split, in which a share is divided into many parts, is the opposite of a reverse stock split.
Rights of accumulation - The ability to purchase anything over an extended period of time. For instance, an institutional investor would do this to avoid making a single, large acquisition that could increase the market price, or an individual investor might do this to lower risk via dollar cost averaging.
Risk - Financially speaking, risk is the possibility that the results or returns on an investment will not match expectations. Risk involves the potential for losing all or a portion of the initial investment. Risk is frequently evaluated quantitatively by observing past actions and results, and take them into account. A frequent statistic metric used to measure risk in finance is standard deviation. The standard deviation gives a measurement of how volatile asset prices are in relation to their average historical values over a specific time period.
Risk/reward ratio - The risk/reward ratio identifies the potential return an investor can expect to receive for each dollar they risk on a particular investment. Many investors use risk/reward ratios to evaluate the projected rewards of an investment with the level of risk they must incur in order to attain these returns. For example, an investment with a risk-to-reward ratio of 1:4 indicates that the investor is willing to risk $1 in exchange for the chance to make a $4 profit.
Risk tolerance - The degree to which investor can accept value fluctuations in their investments.
Russell 1000 Index - One of the indices of the stock market used by investors as benchmarks is the Russell 1000 Index. It reflects the top 1000 American firms by market capitalization and is a subgroup of the wider Russell 3000 Index. The UK-based FTSE Russell Group, which owns and runs the Russell 1000, is a publicly traded company. The Russell 1000 is regarded as a large-cap investing benchmark index.
Russell 2000 Index - The Russell 2000 Index is a stock market index that tracks the performance of the 2,000 smaller businesses that make up the Russell 3000 Index. Because of its concentration on smaller businesses that target the U.S. market, the Russell 2000, which is administered by London's FTSE Russell Group, is frequently referred to as a leading indicator of the American economy. Many investors compare the success of small-cap mutual funds to the movement of the index since they view the index as a better reflection of opportunities in that entire sub-section of the market than in the other main indices (Dow Jones, S&P 500 and Nasdaq 100). That's because those narrower indices may have biases or be exposed to more stock-specific risks which might affect their performance overall.
Russel 3000 index - The FTSE Russell Russell 3000 Index is a market capitalization-weighted equity index that offers exposure to the entire U.S. stock market. The index monitors the performance of the top 3,000 U.S.-traded equities, which account for 97% of all equity securities issued by U.S. corporations.