To use negative numbers in a geometric mean calculation, you have to convert them to a proportion. For example, if you had an investment that returned -3%, you would use 1 - 0.03 = 0.97 as your value.

The geometric mean is best used to calculate the average of a series of data where each item has some relationship to the others. That’s because the formula takes into account serial correlation.

Per the chart, the correct 17-year average annualized return (or geometric mean) for the S&P 500 is 4.51%, whereas the incorrect arithmetic average return is the significantly higher 6.16%.

The proper way to calculate average investment returns is with a geometric mean that takes into account the compounding effects of a series of volatile returns over time.

Formula of Mean: Know to How to Calculate Median for Grouped, Ungrouped data along with solved examples, questions with solution. SBI PO Notification 2025 OUT, Check Here Check Results ...

I’d never heard of “geometric mean” until today, and I’ve known how to calculate parallel resistances since I was a young pup. Report comment. Reply. Greg A says: ...

The geometric mean return, or CAGR, is the periodic return that, if earned and compounded every year on the beginning value, produces a future value equal to the ending value.