When you want to compare two or more similar things, like investments or financial returns, it's essential to use consistent metrics or units. In the context of financial returns, you can compare investments "apples to apples" by using metrics like:
1. **Annualized Return:** This metric expresses the average annual return on an investment, which allows you to compare investments of different time frames on an annual basis.
2. **Compound Annual Growth Rate (CAGR):** CAGR is used to determine the annual growth rate of an investment, smoothing out the returns over time.
3. **Total Return:** This includes not only the investment's price appreciation but also any income generated, such as dividends or interest. It provides a comprehensive view of an investment's performance.
4. **Risk-Adjusted Return:** This accounts for the level of risk associated with an investment. The most common measure for this is the Sharpe Ratio.
By using these metrics, you can make more accurate comparisons between different investments to ensure you're indeed comparing "apples to apples" and not overlooking important aspects of their performance.