What is the 'Geometric Mean'
The geometric mean is the average of a set of products, the calculation of which is commonly used to determine the performance results of an investment or portfolio. Technically defined as "the 'n'th root product of 'n' numbers", the formula for calculating geometric mean is most easily written as:
Where 'n' represents the number of returns in the series.
The geometric mean must be used when working with percentages (which are derived from values), whereas the standard arithmetic mean will work with the values themselves.
BREAKING DOWN 'Geometric Mean'
The main benefit to using the geometric mean is that the actual amounts invested do not need to be known; the calculation focuses entirely on the return figures themselves and presents an "applestoapples" comparison when looking at two investment options.

Mean
The simple mathematical average of a set of two or more numbers. ... 
TimeWeighted Rate of Return
A measure of the compound rate of growth in a portfolio. Because ... 
Permutation
In mathematics, one of several ways of arranging or picking a ... 
Mean Return
1. In securities analysis, it is the expected value, or mean, ... 
Estimated LongTerm Return
A unit investment trust's estimated return over the life of the ... 
Average Price
1. A representative measure of a range of prices that is calculated ...

Fundamental Analysis
Explaining the Geometric Mean
The average of a set of products, the calculation of which is commonly used to determine the performance results of an investment or portfolio. 
Investing
These 28 Companies Just Became Very Important
Only 28 companies are driving 50% of U.S. profit, and only one of them has delivered consistently on revenue, net income, and stock appreciation. 
Fundamental Analysis
The Most Accurate Way To Gauge Returns: The Compound Annual Growth Rate
The compound annual growth rate, or CAGR for short, represents one of the most accurate ways to calculate and determine returns for individual assets, investment portfolios and anything that ... 
Stock Analysis
These 25 Stocks Are Dividend Superstars (NVDA, MA)
These 25 stocks are dividend superstars, but only four should be on your radar. 
Investing
The Most Shorted Stocks and ETF (PFE,SPY,CHK,S)
These stocks and ETF are heavily shorted and have been rallying at breakneck speed. Will it continue? 
Investing
Calculating The Means
Learn more about the different ways you can calculate your portfolio's average return. 
Personal Finance
Top Healthcare, Medical Equipment Stocks of 2015
A short list of the top healthcare and medical equipment stocks of 2015. 
Economics
Calculating the Arithmetic Mean
The arithmetic mean is the average of a sum of numbers. 
Investing News
How Are 2015’s Best Stocks Performing YTD?
Are last year's best stocks still delivering for investors? If yes, why? If no, why not? 
Active Trading
Moving Averages: What Are They?
By Casey Murphy, Senior Analyst ChartAdvisor.com Among the most popular technical indicators, moving averages are used to gauge the direction of the current trend. Every type of moving average ...

How can investors benefit by understanding geometric means?
Discover why investors should know the difference between geometric and arithmetic means, and why the geometric mean is more ... Read Answer >> 
What are some examples of applications of the geometric mean?
Learn about applications of the geometric mean based on examples such as calculations of portfolio return, growth rates and ... Read Answer >> 
What is a geometric mean in statistics?
Learn what the geometric mean is in statistics and how it is used to calculate various growth rates and returns by financial ... Read Answer >> 
Can two numbers have the same arithmetic and geometric means?
Learn about the often complicated relationship between the geometric mean and arithmetic mean for a set of numbers, and which ... Read Answer >> 
The ABC Global mutual fund exhibited the following rates of return over the last ...
The correct answer is: a) Arithmetic Mean = (15 + 7 + 6.5 + 11.3 + 32.7)/5 = 7.18% Geometric Mean =[(1.15 x 0.93 x 1.065 ... Read Answer >> 
How do investors calculate the present value of a future investment?
Learn what present value is, how to calculate the present value of a future investment, and what formula investors use to ... Read Answer >>