CAP (Cumulative Abnormal Returns)

Cumulative Abnormal Returns (CAR) measure the total difference between a stock’s actual performance and what was expected over a specific period, often around a significant event like an earnings report or announcement. It helps investors see whether the stock gained or lost value unexpectedly, indicating how the market reacted to the news. By summing these small differences over time, CAR provides a clearer picture of the event's overall impact on the stock’s value, isolating the effect of the event from normal market fluctuations.