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Average Return Calculator
Calculate arithmetic and geometric average returns from yearly return data.
Separate values with commas or spaces.
Arithmetic Average
5.60%
Geometric Average
5.42%
Number of Periods
5
Arithmetic ≥ Geometric
Typical
Explanation
Arithmetic Average: Simple mean of returns. (10% + -5% + 8% + 12% + 3%) / 5 = 5.60%
Geometric Average: Compound annual growth rate. [((1 + 0.1) × (1 + -0.05) × (1 + 0.08) × (1 + 0.12) × (1 + 0.03))1/5 - 1] × 100 = 5.42%
The geometric average is always less than or equal to the arithmetic average (by Jensen's inequality) and better represents the actual compound growth rate.