Geometric Mean

Geometric Mean
The average of a set of products, the calculation of which is commonly used to determine the performance results of an investment or portfolio. Technically defined as "the 'n'th root product of 'n' numbers", the formula for calculating geometric mean is most easily written as:

Geometric Mean


Where 'n' represents the number of returns in the series.

The geometric mean must be used when working with percentages (which are derived from values), whereas the standard arithmetic mean will work with the values themselves.

The main benefit to using the geometric mean is that the actual amounts invested do not need to be known; the calculation focuses entirely on the return figures themselves and presents an "apples-to-apples" comparison when looking at two investment options.


Investment dictionary. . 2012.

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Look at other dictionaries:

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  • geometric mean — ► NOUN ▪ the central number in a geometric progression (e.g. 9 in 3, 9, 27), also calculable as the nth root of a product of n numbers …   English terms dictionary

  • Geometric mean — The geometric mean, in mathematics, is a type of mean or average, which indicates the central tendency or typical value of a set of numbers. It is similar to the arithmetic mean, which is what most people think of with the word average, except… …   Wikipedia

  • geometric mean — noun the mean of n numbers expressed as the n th root of their product • Topics: ↑statistics • Hypernyms: ↑mean, ↑mean value * * * geoˌmetric ˈmean [geometric mean] …   Useful english dictionary

  • geometric mean — geometrinis vidurkis statusas T sritis Standartizacija ir metrologija apibrėžtis Dydis, išreiškiamas n ąja šaknimi iš matuojamojo dydžio n verčių sandaugos. atitikmenys: angl. geometric average; geometric mean; geometrical mean vok. geometrisches …   Penkiakalbis aiškinamasis metrologijos terminų žodynas

  • geometric mean — geometrinis vidurkis statusas T sritis fizika atitikmenys: angl. geometric average; geometric mean; geometrical mean vok. geometrisches Mittel, n rus. среднегеометрическое значение, n; среднее геометрическое, n pranc. moyenne géométrique, f …   Fizikos terminų žodynas

  • geometric mean — ge′omet′ric mean′ n. math. the mean of n positive numbers obtained by taking the nth root of the product of the numbers: The geometric mean of 6 and 24 is 12[/ex] …   From formal English to slang

  • geometric mean — noun Date: 1879 the nth root of the product of n numbers; specifically a number that is the second term of three consecutive terms of a geometric progression < the geometric mean of 9 and 4 is 6 > …   New Collegiate Dictionary

  • geometric mean — Math. the mean of n positive numbers obtained by taking the nth root of the product of the numbers: The geometric mean of 6 and 24 is 12. * * * …   Universalium

  • geometric mean — An average obtained by calculating the nth root of a set of n numbers. For example the geometric mean of 7, 100, and 107 is 3√74 900 = 42.15, which is considerably less than the arithmetic mean of 71.3 …   Accounting dictionary

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