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how to calculate geometric mean return. The final expression represents the geometric average of r 1 and r 2. This video shows how to calculate the geometric average return also known as the compounded annual return of a stock or index Edspira is the creation of.
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This is equivalent to raising 19500 to the 15-th power. For example you invest 1000 in a project and five years later you earn a return of 2000. It comes from the arithmetic mean but uses multiplication and roots.
In other words it is the average return of an investment over time a metric used to evaluate the performance of a single investment or an investment portfolio.
For example you invest 1000 in a project and five years later you earn a return of 2000. In order to find the geometric mean multiply all of the values together before taking the n th root where n equals the total number of values in the set. Hence the Geomean of 30000 and 33000 is calculated as. The holding period return is the total return over multiple periods.
