
Re: Can you calculate the Geometric Average
Gysbert Wassenaar Oct 8, 2014 10:12 AM (in response to Nicholas Scott )Can you post an example document that demonstrates the problem?

Re: Can you calculate the Geometric Average or Compound Rate of Return
Jonathan Dienst Oct 8, 2014 10:50 AM (in response to Nicholas Scott )Hi
The attached model shows how to calculate compounded values, compound return and the average return per period.
What you are referring to as geometric average is actually the compound return. For a given set of returns, r1 .. rn, the geometric average is
(1 + r1) * (1 + r2) * (1 + r3) * ..... * (1 + rn) ^ (1/n)
(ie the nth root of the compound return). This is also the average return per period.
HTH
Jonathan

GeometricAverage.qvw 140.8 K

Re: Re: Can you calculate the Geometric Average or Compound Rate of Return
Nicholas Scott Oct 9, 2014 5:07 PM (in response to Jonathan Dienst )An instance where the specification was drafted with a specific formula rather than an explanation of the requirement!
I had just been proposing that the compound annual growth rate be a better measure than compound growth:
∛(((End value)/(Start value)) )1
When I realized that the "geometric average" was essentially just the period return:
((End value)/(Start value))1
Thanks for your reply.
Nick
