In its account, the company uses TWR to compensate for deposits and withdrawals. Contrast this with other portfolio metrics, such as the Personal Return Rate of Accounts (PRR), which fluctuates with the amount entering and leaving the portfolio.

TWR divides portfolio returns into separate breaks, allowing performance to be measured on a daily basis based on the assets available for investment, and then these daily returns can be accumulated or linked for a longer period of time.

The TWR provides a rate of return for each period or interval in which the cash flow changed. If you split a product that changes the cash flow, the result is more accurate than just taking the initial and closing balances. Over time, the product multiplies the product for each sub-period or holding period, which then combines the two, showing how the product grows over time. The goal is to review an investment portfolio.

Time-weighted return (TWR) is a method used to measure the performance of an investment portfolio by eliminating the impact of external cash flows. It calculates the compound rate of growth of a portfolio's value over a specific period, disregarding the effect of contributions or withdrawals. TWR provides a more accurate representation of the investment manager's skill by isolating the impact of market movements.

To compute TWR, the investment horizon is divided into sub-periods, and the returns for each sub-period are geometrically linked. This method prevents distortions caused by the timing and size of cash flows, offering a clearer assessment of the portfolio's intrinsic performance. Time-weighted return is widely used in the financial industry, especially in evaluating the performance of mutual funds, hedge funds, and other investment vehicles where capital flows can influence reported returns.