The difference between the two values is the length. Geometric mean can be more useful when the dataset is logarithmic. It can be calculated with both positive and negative sets of numbers. It is applicable only to only a positive set of numbers. Similarly, for a dataset of 50, 75, and 100, arithmetic mean is calculated as (50+75+100)/3 = 75 Geometric mean is calculated as cube root of (50 x 75 x 100) = 72.1 Suppose a dataset has the following numbers – 50, 75, 100. The arithmetic mean is always higher than the geometric mean as it is calculated as a simple average. The geometric mean is always lower than the arithmetic means due to the compounding effect. (Return1 + Return2 + Return3 + Return4)/ 4
#Arithmetic vs geometric sequence series#
The geometric mean is a series of numbers calculated by taking the product of these numbers and raising it to the inverse of the length of the series.
read more is calculated as the sum of all the numbers divided by the number of the dataset. It is the aggregate of all the values in a data set divided by the total count of the observations. The arithmetic mean Arithmetic Mean Arithmetic mean denotes the average of all the observations of a data series.
Geometric Mean is known as multiplicative mean and is a little complicated and involves compounding.
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