Thanks:  0
Likes:  0

# Thread: Calculating a Geometric Mean with some negative values

1. ## Calculating a Geometric Mean with some negative values

I am trying to work out how to calculate the geometric mean of a series of values, some of which are negative, ie. investment returns over a series of years with some negatives.

The Geomean function doesn't work because it only uses positive numbers.

Any help would be greatly appreciated.

2. Can you just use the average function?

I don't think that any negative values can ever be used with the geometric mean.

I think this formula calculates the geometric mean.

=PRODUCT(A1:A6)^(1/COUNT(A1:A6))

I hope that helps.

3. Hi Marcus
Welcome to the board

I never saw applications with geometric mean with negatives (doesn't mean it doesn't exist, of course).

Usually when you calculate the geometric mean of the returns of an investment over the years with positive and negative returns you are trying to find an equivalent average compounded return for the period.

The returns you usually use are not the percentages you add or subtract but the values you multiply to get the final amount.

Example
You invest 100
Year 1: return 20% (total: 120)
Year 2: return -5% (total: 114)

The geometric mean is calculated relative to the total (100%)

=((1+.2)*(1-.05))^(1/2)-1= 6.77%

This means that an investment with a constant return of 6.77% each period is equivalent to your investment.

You invest 100
Year 1: return 6.77% (total: 106.77)
Year 2: return 6.77% (total: 114)

Is this not your case? Please elaborate and post a sample with inputs, the logic and the expected results.

Kind regards
PGC

4. Try this

Code:
`=PRODUCT(1+A1:A3)^(1/COUNT(A1:A3))-1`
Confirm with Ctrl + Shift + Enter

5. P. S.
If you agree with my post you can use the Geomean as you originally wanted:

=Geomean(1+a1:a3)-1

Confirmed with Ctrl + Shift + Enter

6. Thanks to you all - have solved the problem which was a lack of thinking on behalf of the user. Was using negative percentages - what I should have been doing was using 100%=1 and -6%= 0.94.

Then I can use the simple GEOmean function as is.

Thank you all

7. ## Re: Calculating a Geometric Mean with some negative values

Originally Posted by pgc01
P. S.
If you agree with my post you can use the Geomean as you originally wanted:

=Geomean(1+a1:a3)-1

Confirmed with Ctrl + Shift + Enter
Another happy customer served!

I vaguely remember some of this math from freshman college. But, its a stretch. And, that was all well before spreadsheets!

8. ## Re: Calculating a Geometric Mean with some negative values of Bank Investments

 Geometric mean of negative and positive returns. 23.5,33.6,-18.8,14.4,-14.9,-1,3,96.2,3.4,0 Calculating your bank returns for 10 years using Excel Spreadsheet. % Add 1 23.5 0.235 1.235 1.104352 =GEOMEAN(D3,D4,D5,D6,D7,D8,D9,D10,D11,D12) 33.6 0.336 1.336 using excel D3=1.235 D12=1 -18.8 -0.188 0.812 B3=23.5 C3=0.235 14.4 0.144 1.144 -14.9 -0.149 0.851 -1 -0.01 0.99 3 0.03 1.03 Note: Add one to remove negative and subtract 1 from answer. 96.2 0.962 1.962 3.4 0.034 1.034 0 0 1 Geometric mean = 10.4% is the answer =10.4%

9. ## Re: Calculating a Geometric Mean with some negative values

Originally Posted by thazan
Can you just use the average function?

I don't think that any negative values can ever be used with the geometric mean.

I think this formula calculates the geometric mean.

=PRODUCT(A1:A6)^(1/COUNT(A1:A6))

I hope that helps.

great help! =GEOMEAN(1+A1:A6)-1 is also working, thank you both

## User Tag List

#### Posting Permissions

• You may not post new threads
• You may not post replies
• You may not post attachments
• You may not edit your posts
•