Glossary
Performance, verification & regulatory terms
Short definitions of the calculations, cryptographic primitives, and regulatory categories that underpin a NakedPnL verified track record.
A
Alpha (Finance) — Definition, Formula, and Jensen's Alpha
Alpha measures a portfolio's excess return relative to a benchmark predicted by CAPM. Definition, Jensen's alpha formula, worked example, and benchmark-choice limitations.
Attribution Analysis — How Performance Is Decomposed Into Sources of Return
Attribution analysis decomposes a return figure into its sources — allocation, selection, interaction, and timing. Definition, the standard frameworks, and what attribution can and cannot prove on its own.
B
Beta (Finance) — Definition, Formula, and CAPM Context
Beta measures a portfolio's systematic exposure to a benchmark. Definition, regression formula, worked example, and why beta is benchmark- and window-dependent.
Bitcoin Timestamp — Definition and the Median-of-Eleven Rule
A Bitcoin block timestamp is the miner-supplied time embedded in a block header. Network rules constrain it to a tight window, making forgery impractical.
C
Calmar Ratio — Definition, Formula, and Drawdown Sensitivity
The Calmar ratio divides annualised return by maximum drawdown. Definition, formula, worked example, and why a single bad day can dominate the figure.
Canonical JSON — RFC 8785 and Why Key Order Matters
Canonical JSON (RFC 8785 / JCS) is a byte-stable serialization of JSON. Two semantically identical objects always produce the same bytes and the same hash.
Cash Flow (Finance) — Definition and Role in Performance Measurement
External cash flows are deposits and withdrawals that change a portfolio's funded base. Definition, examples, and why TWR is designed to neutralise them.
Compound Annual Growth Rate (CAGR) — Definition and Formula
CAGR is the constant annual rate that would grow a beginning value into an ending value over a given period. Definition, formula, when it applies, and when TWR is preferred.
Content Hash — Definition in NakedPnL's Verification
A content hash is the SHA-256 digest of a record's canonicalized contents. NakedPnL stores one per venue response so any later edit is detectable.
Copy Trading — Definition and Regulatory Characterization
Copy trading automatically mirrors one trader's orders into another's account. In several jurisdictions it is regulated as portfolio management. NakedPnL is not a copy-trading platform.
CUSIP Track Record — What a Security Identifier Tells You About Performance
A CUSIP identifies a security, not a strategy. What a CUSIP-level track record means in practice, where it is the right primitive, and where account-level verified performance is the more honest one.
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I
Information Ratio — Definition, Formula, and Use by Allocators
Information ratio is excess return over a benchmark divided by tracking error. Definition, formula, worked example, and how institutional allocators use it.
Internal Rate of Return (IRR) — Definition and How It Differs from TWR
Internal rate of return is the discount rate that sets the net present value of a stream of cash flows to zero. Definition, formula, and comparison with TWR.
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M
Maximum Drawdown — Definition, Formula, and Window Sensitivity
Maximum drawdown is the largest peak-to-trough decline in a portfolio's value. Definition, formula, worked example, and why extending history monotonically increases it.
Merkle Tree — Definition and Proof of Inclusion
A Merkle tree commits to many records with a single root hash and lets a verifier prove inclusion of any record in O(log N) hashes.
N
NAV Reconciliation — Definition, Process, and Why It Matters for Verification
NAV reconciliation is the process of cross-checking a portfolio's stated net asset value against an independent source. Definition, fund-administration practice, and how NakedPnL applies the same principle for public verification.
NAV Watermark (High-Water Mark) — Definition, How Performance Fees Use It
A NAV watermark is the highest historical net asset value reached by a fund or account, used as the threshold above which a manager earns performance fees.
Net Asset Value (NAV) — Definition and Daily Computation
NAV is the total value of an account's assets minus liabilities. NakedPnL records one NAV snapshot per account per day as the basis for time-weighted returns.
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Performance Persistence — Definition, Evidence, and How to Measure It Honestly
Performance persistence is the tendency for past investment performance to predict future performance. The academic evidence is mixed; the appearance of persistence is often an artifact of survivorship bias.
Position Attestation — Definition, How It Works, and Why It Matters for Track Records
A position attestation is a primary-source statement that a specific account held a specific position at a specific time. Definition, the typical sources, and how attestation interacts with a verified track record.
Prime Broker — Definition and Single Source of Truth
A prime broker centralises trade execution, custody, financing, and reporting for a hedge fund. The result: one canonical record of positions and cash.
Proof of Trade — On-Chain Reconciliation as a Verification Primitive
Proof of trade is the property of a trade history whose existence can be confirmed against an independent on-chain or signed-message record. Used heavily in prediction markets and DeFi venues.
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S
SHA-256 — Definition and Properties
SHA-256 is a cryptographic hash function that maps any input to a 256-bit digest with strong preimage, second-preimage, and collision resistance.
Sharpe Ratio — Definition, Formula, and Why It Can Mislead
The Sharpe ratio is excess return per unit of total volatility. Definition, formula, worked example, and the lookback-window sensitivity that makes it gameable.
Sortino Ratio — Definition, Formula, and Limitations
The Sortino ratio is excess return divided by downside deviation. Definition, formula, worked example, and the threshold-choice problem that makes it gameable.
T
Time-Weighted Return (TWR) — Definition and Formula
Time-weighted return measures portfolio performance independent of investor cash flows. Definition, formula, worked example, and why TWR is the methodology required by GIPS.
Track Record Portability — What Moves With a Trader, What Stays Behind
Portability is the property of a track record that lets it survive a change of platform, broker, or employer. The label is meaningful only when the underlying primary records can travel with the trader.
Track Record Verification — Definition, the Verification Surface, and What Reviewers Actually Check
Track record verification is the act of confirming that a stated performance history matches an independent primary record. Definition, the steps a reviewer takes, and how cryptographic chaining changes the surface.
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Verified Track Record — Definition, Standards, and How It Differs from a Claimed One
A verified track record is a performance history a third party can re-derive from primary venue records. Definition, the verification surface that makes it stand up to due diligence, and the failure modes of self-reported records.
Volatility (Finance) — Definition, Formula, and Limitations
Volatility is the standard deviation of periodic returns, usually annualised. Definition, formula, worked example, and why it is an incomplete measure of risk.