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Estimating the Historical Share of Stocks That Double in Three Years

Article Quant Q&A · Author: jason
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Summary

The document asks how to estimate the historical fraction of global stocks above a specified market-cap threshold that doubled over three years. The answer says this cannot be inferred reliably from an assumed market average or a standard deviation alone; it requires historical stock-level data, with results depending on the chosen market universe and available period.

For a historical estimate, select eligible stocks, calculate each stock’s three-year return, and count the share that reached at least a 100% gain. The response also notes that a constant annualized return corresponding to a doubling over three years is about 26%, but counting actual three-year outcomes is a direct way to answer the historical question. Forecasting future candidates is a separate task requiring time-series analysis and uncertainty estimates. The post gives a measurement approach, not a computed percentage, and does not resolve survivorship or delisting bias in the underlying dataset.

Key ideas

  • A historical doubling rate requires stock-level data for a defined universe and period.
  • The estimate can be calculated by counting eligible stocks with at least a 100% three-year return.
  • A constant annualized return that doubles value in three years is about 26%.
  • Forecasting future doubling potential requires a separate analysis and uncertainty assessment.
  • Dataset selection and survivorship treatment can affect the estimate.

Tags

EquitiesStatisticsBacktestingUS markets
Full text
# what % of stocks with +$1b market cap will double in 3 years on average historically?


# what % of stocks with +$1b market cap will double in 3 years on average historically?












If I'm looking to pick stocks that will double in 3 years, how do I figure out what is the likely universe that I'm choosing from? I just want a rough estimate of the universe given the market cap constraint of $1b USD market cap on a global basis. How do I go about estimating that?

I need a historical "average"... historically on average what % of stocks will double in 3 years?

Maybe make some simple standard deviation of returns for the market and see what sigma 2x in 3 years falls under? let's say if historically market goes up 12% a year... not sure if it is the right approach to it.

Basically wanted to get a rough estimate without actually crunching a whole bunch of historical numbers.

## Answer by rbm (score 1, accepted)

https://quant.stackexchange.com/a/26045

few comments:

1) stock that will double in 3 years means that the yearly average return must satisty $x(1+r)^3=2x$, which gives the value of r=25.99%. (a yearly return of 25.99% is highly unrealistic)

2) the question "historically on average what % of stocks will double in 3 years?" cannot be answered without looking at the historical numbers, and the more data you'd use, the better.

3) given that data (whatever data you have available - FTSE, S&P 500, Rusell), you'd choose the +$1b stocks, calculate yearly returns and look at the percentage of returns which satisfy the above condition (i.e. average return of 25.99%), or calculate returns over three-year period and simply count how many have a 100% return in 3 years. This is if you're interested in historical performance.

If you're looking to forecast the potential future returns and see if a stock can double, you'd need to do a time-series analysis (of each stock), forecast the returns (with a certain confidence interval), and see whether doubling in 3 years is possible.

Shown in full with attribution under the source's licence. Licence: CC BY-SA 4.0 (Stack Exchange)

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.