Investors usually consider the geometric mean a more accurate measure of portfolio performance than the arithmetic mean because it accounts for compounding. Learn more.

When talking investment portfolios, the geometric mean is also sometimes referred to as compounded annual growth rate or time-weighted rate of return.

The simple definition of a mean is that of a numeric quantity which represents the center of a collection of numbers. Here the trick lies in defining the exact type of numeric collection, as beyond… ...

The comparison is between arithmetic or geometric mean returns. Returns themselves are neither arithmetic nor geometric. Follow us on Facebook, Instagram, Twitter, and LinkedIn!

Eugene Salamin, Computation of $\pi$ Using Arithmetic-Geometric Mean, Mathematics of Computation, Vol. 30, No. 135 (Jul., 1976), pp. 565-570 ...