Geometric Average

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The geometric average is a way to construct an aggregate measure of security prices. The geometric average is a very precise measure although it is rarely used. The geometric average multiplies the various prices and takes the nth root with n equalling the number of stocks (or things) that you are averaging.

To calculate the geometric average you:

average = (price1 * price2 * price3 * .... * pricen) ^ (1 / n)