Calculating Forward-Adjusted Stock Prices from Backward-Adjusted Data
Summary
The document gives a conversion procedure for obtaining forward-adjusted stock prices when a platform supplies backward-adjusted prices and their adjustment factors. The first step is to recover the unadjusted market price by dividing the backward-adjusted price by its corresponding factor. Next, it derives a forward-adjustment factor by dividing each adjustment factor by the factor on the final date in the series. Multiplying the recovered market price by this forward-adjustment factor yields the forward-adjusted price.
The procedure is offered in response to a need to compare platform data with prices shown by ordinary stock services. It is a concise formula explanation rather than a worked example: the document does not specify corporate-action conventions, provide sample values, or discuss how data vendors define adjustment factors. Users should therefore confirm that the platform’s factor series and date alignment follow the stated convention before comparing prices. The source does not assess any trading strategy or offer evidence about investment performance; its value is in describing a data transformation for equities.
Key ideas
- Divide the backward-adjusted price by its factor to recover the unadjusted price.
- Normalize each adjustment factor by the factor on the series’ final date.
- Multiply the unadjusted price by the normalized factor to obtain the forward-adjusted price.
- The procedure supports comparison with services that display forward-adjusted prices.
- Confirm factor definitions and date alignment because vendor conventions are not discussed.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.