When analyzing financial trends, which key performance metric indicates direction and momentum of an investment?

The key performance metric that indicates direction and momentum of an investment is percentage change. Percentage change measures how much an investment's value has increased or decreased over a period relative to its initial value. This metric is particularly effective in providing insights into the investment's growth or decline, making it easier to identify trends over time.

For instance, if the percentage change shows a significant increase, it indicates positive momentum, suggesting that the investment is gaining value and that the upward trend may continue. Conversely, a negative percentage change would signify a weakening investment. This metric allows investors to assess both the magnitude of changes in value and the rate at which those changes occur, thereby helping them make more informed decisions based on the observed trends.

Other metrics provide useful insights as well but do not specifically quantify the change in value over time. Average return offers a historical perspective of returns without indicating current momentum; cost basis reflects the original investment amount and does not provide insights on direction or momentum; and portfolio balance represents the current allocation of assets rather than how those assets have changed in value over time.