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Advanced Average Return Calculator

Evaluate periodic investment returns with arithmetic, geometric, annualized, weighted, and risk-adjusted metrics across one or more scenarios.

Formulas Used

  • Arithmetic Mean:
  • Arithmetic Mean = Sum of Periodic Returns / Number of Periods
  • Geometric Mean:
  • Geometric Mean = [(1+r1)...(1+rn)]^(1/n) - 1
  • Annualized Return:
  • Annualized = (Final / Initial)^(1/Years) - 1
  • Real Return:
  • Real Return = ((1 + Nominal)/(1 + Inflation)) - 1
  • Sharpe Ratio:
  • Sharpe = (Average Return − Risk-Free Rate) / Volatility

Investment Analysis Notes

  • - Arithmetic return shows simple average performance.
  • - Geometric return better reflects compounding behavior.
  • Inflation Impact:
  • - Nominal returns can overstate actual purchasing power.
  • - Real returns provide better long-term planning clarity.
  • Risk & Volatility:
  • - Standard deviation indicates return dispersion.
  • - Higher volatility usually means higher uncertainty.
  • Benchmarking:
  • - Compare strategy against benchmark return expectations.
  • - Underperformance may indicate allocation issues.
  • Weighted Return:
  • - Use weights for portfolio-level blended performance.
  • - Ensure weights sum to 100% for accuracy.
  • Notes:
  • - Include enough return periods for meaningful statistics.
  • - Validate assumptions yearly with updated market data.
  • - Use risk-adjusted metrics, not return alone.

Scenario 1