Hedge Fund Blogs From HedgeCo.Net

On Arithmetic vs. Geometric Average Returns

I’ve started a new blog which discusses the statistic calculation issues which hedge Funds have to deal with. I’m starting out with the most basic of statistics and then building up to the more complex ratios.

The most basic of all calculations a hedge fund will want to report to their investors is their Average returns.

Despite the simple nature of this calculation, the difference between the Arithmetic and Geometric averages as well as the difference between the terminology used to refer to these terms, for example Compounded Annual Rate of Return vs. Compound Annual Growth Rate, have lead to confusion as to what number is being displayed.

Read the full article at: Calculating Average Returns – Arithmetic vs. Geometric Average

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