GEOMETRIC MEAN

Average of a set of products, computing the commonly used to identify the performance results of an investment or portfolio. It is technically defined as "the ‘n’th root product of ‘n’ numbers". Computed as:

{Return 1 x Return 2 x … Return n}1/n

n = number of returns in the series

This can be used when working with percentages (derived from values), inasmuch as the standard arithmetic mean works with the values themselves.

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