The geometric mean is a type of average that indicates the central tendency of a set of numbers by using the product of their values. It is particularly useful when dealing with rates of change or percentages. For example, if an investment grows by 10% in one year and 20% in the next, the geometric mean return provides a more accurate representation of the average annual growth rate than the arithmetic mean.
Understanding and utilizing the geometric mean offers a more accurate perspective in various fields, especially finance, investment, and population studies where proportional growth is significant. While traditionally applied to positive datasets, the presence of negative values introduces complexities that demand careful consideration. The ability to appropriately handle datasets containing negative numbers is vital for maintaining data integrity and deriving meaningful insights.
