Difference between revisions of "Average"
en>EmausBot m (r2.7.2+) (Robot: Modifying ca:Mitjana (matemàtiques)) 

(2 intermediate revisions by 2 users not shown)  
Line 1:  Line 1:  
−  In [[  +  In [[colloquial]] language '''average''' usually refers to the sum of a list of numbers divided by the size of the list, in other words the [[arithmetic mean]]. However, the word "average" can be used to refer to the [[median]], the [[Mode (statistics)mode]], or some other central or typical value. In statistics, these are all known as [[measures of central tendency]]. Thus the concept of an average can be extended in various ways in mathematics, but in those contexts it is usually referred to as a [[mean]] (for example the [[Mean#Mean of a functionmean of a function]]). 
−  +  ==Calculation==  
−  
−  
−  
−  
−  
−  
−  
−  
−  
===Arithmetic mean===  ===Arithmetic mean===  
{{MainArithmetic mean}}  {{MainArithmetic mean}}  
−  If ''n'' numbers are given, each number denoted by ''a<sub>i</sub>'', where ''i'' = 1,  +  The most common type of average is the arithmetic mean. If ''n'' numbers are given, each number denoted by ''a<sub>i</sub>'', where ''i'' = 1, …, ''n'', the arithmetic mean is the [sum] of the ''a<sub>i</sub>'s'' divided by ''n'' or 
−  :<math>AM=\frac{1}{n}\sum_{i=1}^na_i=\frac{a_1+a_2+\cdots+a_n  +  :<math>AM = \frac{1}{n}\sum_{i=1}^na_i = \frac{1}{n}\left(a_1 + a_2 + \cdots + a_n\right)</math> 
−  The arithmetic mean, often simply called the mean, of two numbers, such as 2 and 8, is obtained by finding a value A such that 2 + 8 = A + A. One may find that ''A'' = (2 + 8)/2 = 5. Switching the order of 2 and 8 to read 8 and 2 does not change the resulting value obtained for A. The mean 5 is not less than the minimum 2 nor greater than the maximum 8. If we increase the number of terms in the list  +  The arithmetic mean, often simply called the mean, of two numbers, such as 2 and 8, is obtained by finding a value A such that 2 + 8 = A + A. One may find that ''A'' = (2 + 8)/2 = 5. Switching the order of 2 and 8 to read 8 and 2 does not change the resulting value obtained for A. The mean 5 is not less than the minimum 2 nor greater than the maximum 8. If we increase the number of terms in the list to 2, 8, and 11, the arithmetic mean is found by solving for the value of ''A'' in the equation 2 + 8 + 11 = ''A'' + ''A'' + ''A''. One finds that ''A'' = (2 + 8 + 11)/3 = 7. 
−  ===  +  ===Pythagorean means=== 
−  {{  +  {{mainPythagorean means}} 
+  {{see alsoMean#Pythagorean means}}  
+  Along with the arithmetic mean above, the geometric mean and the harmonic mean are known collectively as the Pythagorean means.  
−  The geometric mean of ''n'' nonnegative numbers is obtained by multiplying them all together and then taking the ''n''th root. In algebraic terms, the geometric mean of ''a''<sub>1</sub>, ''a''<sub>2</sub>,  +  ====Geometric mean==== 
+  The [[geometric mean]] of ''n'' nonnegative numbers is obtained by multiplying them all together and then taking the ''n''th root. In algebraic terms, the geometric mean of ''a''<sub>1</sub>, ''a''<sub>2</sub>, …, ''a''<sub>''n''</sub> is defined as  
−  : <math>  +  : <math> GM= \sqrt[n]{\prod_{i=1}^n a_i} = \sqrt[n]{a_1 a_2 \cdots a_n}</math> 
Geometric mean can be thought of as the [[antilog]] of the arithmetic mean of the [[logarithmlogs]] of the numbers.  Geometric mean can be thought of as the [[antilog]] of the arithmetic mean of the [[logarithmlogs]] of the numbers.  
−  Example: Geometric mean of 2 and 8 is <math>  +  Example: Geometric mean of 2 and 8 is <math>SM = \sqrt{2 \cdot 8} = 4</math> 
−  ====  +  ====Harmonic mean==== 
−  +  [[Harmonic mean]] for a nonempty collection of numbers ''a''<sub>1</sub>, ''a''<sub>2</sub>, …, ''a''<sub>''n''</sub>, all different from 0, is defined as the reciprocal of the arithmetic mean of the reciprocals of the ''a''<sub>''i''</sub>{{'}}s:  
−  
−  +  : <math>HM = \frac{1}{\frac{1}{n}\sum_{i=1}^n \frac{1}{a_i}} = \frac{n}{\frac{1}{a_1} + \frac{1}{a_2} + \cdots + \frac{1}{a_n}}</math>  
−  +  One example where the harmonic mean is useful is when examining the speed for a number of fixeddistance trips. For example, if the speed for going from point ''A'' to ''B'' was 60 km/h, and the speed for returning from ''B'' to ''A'' was 40 km/h, then the harmonic mean speed is given by  
−  
−  
−  : <math>  +  : <math>\frac{2}{\frac{1}{60} + \frac{1}{40}} = 48</math> 
−  +  ====Inequality concerning AM, GM, and HM====  
+  A well known inequality concerning arithmetic, geometric, and harmonic means for any set of positive numbers is  
−  : <math>\  +  : <math>AM \ge GM \ge HM</math> 
−  +  It is easy to remember noting that the alphabetical order of the letters ''A'', ''G'', and ''H'' is preserved in the inequality. See [[Inequality of arithmetic and geometric means]].  
−  
−  :  +  Thus for the above harmonic mean example: AM = 50, GM = 49, and HM = 48 km/h. 
−  +  ===Statistical location===  
+  In addition to the [[mean]], the [[mode (statistics)mode]], the [[median]], and the [[midrange]] are often used in as estimates of [[central tendency]] in [[descriptive statistics]].  
−  ===Mode===  +  ====Mode==== 
[[Image:Comparison mean median mode.svgthumb300pxComparison of [[meanarithmetic mean]], [[median]] and [[mode (statistics)mode]] of two [[lognormal distribution]]s with different [[skewness]].]]  [[Image:Comparison mean median mode.svgthumb300pxComparison of [[meanarithmetic mean]], [[median]] and [[mode (statistics)mode]] of two [[lognormal distribution]]s with different [[skewness]].]]  
{{MainMode (statistics)}}  {{MainMode (statistics)}}  
−  The most frequently occurring number in a list is called the mode.  +  The most frequently occurring number in a list is called the mode. For example, the mode of the list (1, 2, 2, 3, 3, 3, 4) is 3. It may happen that there are two or more numbers which occur equally often and more often than any other number. In this case there is no agreed definition of mode. Some authors say they are all modes and some say there is no mode. 
−  
−  
−  ===Median===  +  ====Median==== 
{{MainMedian}}  {{MainMedian}}  
−  The median is the middle number of the group when they are ranked in order. (If there are an even number of numbers, the mean of the middle two is taken.)  +  The median is the middle number of the group when they are ranked in order. (If there are an even number of numbers, the mean of the middle two is taken.) 
Thus to find the median, order the list according to its elements' magnitude and then repeatedly remove the pair consisting of the highest and lowest values until either one or two values are left. If exactly one value is left, it is the median; if two values, the median is the arithmetic mean of these two. This method takes the list 1, 7, 3, 13 and orders it to read 1, 3, 7, 13. Then the 1 and 13 are removed to obtain the list 3, 7. Since there are two elements in this remaining list, the median is their arithmetic mean, (3 + 7)/2 = 5.  Thus to find the median, order the list according to its elements' magnitude and then repeatedly remove the pair consisting of the highest and lowest values until either one or two values are left. If exactly one value is left, it is the median; if two values, the median is the arithmetic mean of these two. This method takes the list 1, 7, 3, 13 and orders it to read 1, 3, 7, 13. Then the 1 and 13 are removed to obtain the list 3, 7. Since there are two elements in this remaining list, the median is their arithmetic mean, (3 + 7)/2 = 5.  
−  ==  +  ==Summary of types== 
−  +  {{see alsoMean#Other means}}  
{class="wikitable" style="background:white;"  {class="wikitable" style="background:white;"  
    
! Name !! Equation or description  ! Name !! Equation or description  
    
−   [[Arithmetic mean]]  <math>\bar{x} = \frac{1}{n}\sum_{i=1}^n x_i = \frac{1}{n} (x_1+\cdots+x_n)</math>  +   [[Arithmetic mean]]  <math>\bar{x} = \frac{1}{n}\sum_{i=1}^n x_i = \frac{1}{n} (x_1 + \cdots + x_n)</math> 
    
 [[Median]]  The middle value that separates the higher half from the lower half of the data set   [[Median]]  The middle value that separates the higher half from the lower half of the data set  
Line 85:  Line 75:  
 [[Harmonic mean]]  <math>\frac{n}{\frac{1}{x_1} + \frac{1}{x_2} + \cdots + \frac{1}{x_n}}</math>   [[Harmonic mean]]  <math>\frac{n}{\frac{1}{x_1} + \frac{1}{x_2} + \cdots + \frac{1}{x_n}}</math>  
    
−   [[Quadratic mean]]<br />(or RMS)  <math>\sqrt{\frac{1}{n} \sum_{i=1}^{n} x_i^2} =  +   [[Quadratic mean]]<br />(or RMS)  <math>\sqrt{\frac{1}{n} \sum_{i=1}^{n} x_i^2} = \sqrt{\frac{1}{n}\left(x_1^2 + x_2^2 + \cdots + x_n^2\right)}</math> 
−  \sqrt {\frac{x_1^2 + x_2^2 + \cdots + x_n^2}  
−  </math>  
    
 [[Generalized mean]]  <math>\sqrt[p]{\frac{1}{n} \cdot \sum_{i=1}^n x_{i}^p}</math>   [[Generalized mean]]  <math>\sqrt[p]{\frac{1}{n} \cdot \sum_{i=1}^n x_{i}^p}</math>  
Line 97:  Line 85:  
 [[Interquartile mean]]  A special case of the truncated mean, using the [[interquartile range]]   [[Interquartile mean]]  A special case of the truncated mean, using the [[interquartile range]]  
    
−   [[Midrange]]  <math>\frac{\max x + \min x  +   [[Midrange]]  <math>\frac{1}{2}\left(\max x + \min x\right)</math> 
    
 [[Winsorized mean]]  Similar to the truncated mean, but, rather than deleting the extreme values, they are set equal to the largest and smallest values that remain   [[Winsorized mean]]  Similar to the truncated mean, but, rather than deleting the extreme values, they are set equal to the largest and smallest values that remain  
−  
−  
}  }  
+  The [[table of mathematical symbols]] explains the symbols used below.  
−  ==  +  ==Miscellaneous types== 
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
Other more sophisticated averages are: [[trimean]], [[trimedian]], and [[normalized mean]], with their generalizations.<ref>{{cite journal last1=Merigo first1=Jose M. last2=Cananovas first2=Montserrat title=The Generalized Hybrid Averaging Operator and its Application in Decision Making year=2009 journal=Journal of Quantitative Methods for Economics and Business Administration volume=9 pages=69–84 issn=1886516X url=http://www.upo.es/RevMetCuant/art.php?id=38}}</ref>  Other more sophisticated averages are: [[trimean]], [[trimedian]], and [[normalized mean]], with their generalizations.<ref>{{cite journal last1=Merigo first1=Jose M. last2=Cananovas first2=Montserrat title=The Generalized Hybrid Averaging Operator and its Application in Decision Making year=2009 journal=Journal of Quantitative Methods for Economics and Business Administration volume=9 pages=69–84 issn=1886516X url=http://www.upo.es/RevMetCuant/art.php?id=38}}</ref>  
One can create one's own average metric using the [[generalized fmeangeneralized ''f''mean]]:  One can create one's own average metric using the [[generalized fmeangeneralized ''f''mean]]:  
−  : <math>y = f^{1}\left(\frac{f(x_1)+f(x_2)+\cdots+f(x_n)  +  : <math>y = f^{1}\left(\frac{1}{n}\left[f(x_1) + f(x_2) + \cdots + f(x_n)\right]\right)</math> 
−  where ''f'' is any invertible function. The harmonic mean is an example of this using ''f''(''x'') = 1/''x'', and the geometric mean is another, using ''f''(''x'') = log ''x''.  +  where ''f'' is any invertible function. The harmonic mean is an example of this using ''f''(''x'') = 1/''x'', and the geometric mean is another, using ''f''(''x'') = log ''x''. 
−  However, this method for generating means is not general enough to capture all averages. A more general method<ref name=Bibby/> for defining an average takes any function ''g''(''x''<sub>1</sub>, ''x''<sub>2</sub>,  +  However, this method for generating means is not general enough to capture all averages. A more general method<ref name=Bibby/> for defining an average takes any function ''g''(''x''<sub>1</sub>, ''x''<sub>2</sub>, …, ''x''<sub>''n''</sub>) of a list of arguments that is [[Continuous functioncontinuous]], [[Monotonicitystrictly increasing]] in each argument, and symmetric (invariant under [[permutation]] of the arguments). The average ''y'' is then the value that, when replacing each member of the list, results in the same function value: {{nowrap1=''g''(''y'', ''y'', …, ''y'') =}} {{nowrap''g''(''x''<sub>1</sub>, ''x''<sub>2</sub>, …, ''x''<sub>''n''</sub>)}}. This most general definition still captures the important property of all averages that the average of a list of identical elements is that element itself. The function {{nowrap1=''g''(''x''<sub>1</sub>, ''x''<sub>2</sub>, …, ''x''<sub>''n''</sub>) =}} {{nowrap''x''<sub>1</sub>+''x''<sub>2</sub>+ ··· + ''x''<sub>''n''</sub>}} provides the arithmetic mean. The function {{nowrap1 = ''g''(''x''<sub>1</sub>, ''x''<sub>2</sub>, …, ''x''<sub>''n''</sub>) =}} {{nowrap''x''<sub>1</sub>''x''<sub>2</sub>···''x''<sub>''n''</sub>}} (where the list elements are positive numbers) provides the geometric mean. The function {{nowrap1 = ''g''(''x''<sub>1</sub>, ''x''<sub>2</sub>, …, ''x''<sub>''n''</sub>) =}} {{nowrap−(''x''<sub>1</sub><sup>−1</sup>+''x''<sub>2</sub><sup>−1</sup>+ ··· + ''x''<sub>''n''</sub><sup>−1</sup>)}} (where the list elements are positive numbers) provides the harmonic mean.<ref name=Bibby>John Bibby (1974). “Axiomatisations of the average and a further generalisation of monotonic sequences”. ''[[Glasgow Mathematical Journal]]'', vol. 15, pp. 63–65.</ref> 
−  The function {{nowrap1=''g''(''x''<sub>1</sub>, ''x''<sub>2</sub>,  
−  The function {{nowrap1=''g''(''x''<sub>1</sub>, ''x''<sub>2</sub>,  
−  The function {{nowrap1=''g''(''x''<sub>1</sub>, ''x''<sub>2</sub>,  
−  ==  +  ===Average percentage return and CAGR=== 
−  +  {{MainCompound annual growth rate}}  
+  A type of average used in finance is the average percentage return. It is an example of a geometric mean. When the returns are annual, it is called the Compound Annual Growth Rate (CAGR). For example, if we are considering a period of two years, and the investment return in the first year is −10% and the return in the second year is +60%, then the average percentage return or CAGR, ''R'', can be obtained by solving the equation: {{nowrap1= (1 − 10%) × (1 + 60%) = (1 − 0.1) × (1 + 0.6) = (1 + ''R'') × (1 + ''R'')}}. The value of ''R'' that makes this equation true is 0.2, or 20%. This means that the total return over the 2year period is the same as if there had been 20% growth each year. Note that the order of the years makes no difference – the average percentage returns of +60% and −10% is the same result as that for −10% and +60%.  
−  +  This method can be generalized to examples in which the periods are not equal. For example, consider a period of a half of a year for which the return is −23% and a period of two and a half years for which the return is +13%. The average percentage return for the combined period is the single year return, ''R'', that is the solution of the following equation: {{nowrap1= (1 − 0.23)<sup>0.5</sup> × (1 + 0.13)<sup>2.5</sup> = (1 + ''R'')<sup>0.5+2.5</sup>}}, giving an average percentage return ''R'' of 0.0600 or 6.00%.  
−  <  +  
−  <  +  ==Moving average== 
−  +  {{mainMoving average}}  
−  +  Given a [[time series]] such as daily stock market prices or yearly temperatures people often want to create a smoother series.<ref>{{cite book  first1=George E.P.  last1= Box first2=Gwilym M. last2= Jenkins title= Time Series Analysis: Forecasting and Control  edition= revised edition publisher=HoldenDay  year=1976  isbn=0816211043}}</ref> This helps to show underlying trends or perhaps periodic behavior. An easy way to do this is to choose a number ''n'' and create a new series by taking the arithmetic mean of the first ''n'' values, then moving forward one place and so on. This is the simplest form of moving average. More complicated forms involve using a [[weighted average]]. The weighting can be used to enhance or suppress various periodic behavior and there is very extensive analysis of what weightings to use in the literature on [[Digital filterfiltering]]. In [[digital signal processing]] the term “moving average” is used even when the sum of the weights is not 1.0 (so the output series is a scaled version of the averages).<ref>{{cite book  first1=Simon  last1= Haykin  title= Adaptive Filter Theory  publisher=PrenticeHall  year=1986  isbn=0130040525}}</ref> The reason for this is that the analyst is usually interested only in the trend or the periodic behavior. A further generalization is an [[Autoregressive moving average model“autoregressive moving average”]]. In this case the average also includes some of the recently calculated outputs. This allows samples from further back in the history to affect the current output.  
−  
−  
==Etymology==  ==Etymology==  
−  +  "Few words have received more etymological investigation." <ref>Oxford English Dictionary</ref> In the 16th century ''average'' meant a customs duty, or the like, and was used in the Mediterranean area. It came to mean the cost of damage sustained at sea. From that came an "average adjuster" who decided how to apportion a loss between the owners and insurers of a ship and cargo.  
Marine damage is either ''particular average'', which is borne only by the owner of the damaged property, or [[general average]], where the owner can claim a proportional contribution from all the parties to the marine venture. The type of calculations used in adjusting general average gave rise to the use of "average" to mean "arithmetic mean".  Marine damage is either ''particular average'', which is borne only by the owner of the damaged property, or [[general average]], where the owner can claim a proportional contribution from all the parties to the marine venture. The type of calculations used in adjusting general average gave rise to the use of "average" to mean "arithmetic mean".  
−  +  The root is found in Arabic as ''awar'', in Italian as ''avaria'', in French as ''avarie'' and in Dutch as ''averij''. It is unclear in which language the word first appeared.  
+  
+  There is earlier (from at least the 11th century), unrelated use of the word. It appears to be an old legal term for a tenant's day labour obligation to a sheriff, probably anglicised from "avera" found in the English [[Domesday Book]] (1085).  
==See also==  ==See also==  
{{PortalStatistics}}  {{PortalStatistics}}  
−  
*[[Law of averages]]  *[[Law of averages]]  
−  *[[  +  *[[Expected value]] 
−  ==  +  ==References== 
{{Reflist}}  {{Reflist}}  
−  
−  
−  
==External links==  ==External links==  
Line 185:  Line 139:  
[[Category:Means]]  [[Category:Means]]  
[[Category:Statistical terminology]]  [[Category:Statistical terminology]]  
−  [[Category:  +  [[Category:Arithmetic functions]] 
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
−  
− 
Latest revision as of 20:20, 6 January 2015
In colloquial language average usually refers to the sum of a list of numbers divided by the size of the list, in other words the arithmetic mean. However, the word "average" can be used to refer to the median, the mode, or some other central or typical value. In statistics, these are all known as measures of central tendency. Thus the concept of an average can be extended in various ways in mathematics, but in those contexts it is usually referred to as a mean (for example the mean of a function).
Calculation
Arithmetic mean
{{#invoke:mainmain}} The most common type of average is the arithmetic mean. If n numbers are given, each number denoted by a_{i}, where i = 1, …, n, the arithmetic mean is the [sum] of the a_{i}'s divided by n or
The arithmetic mean, often simply called the mean, of two numbers, such as 2 and 8, is obtained by finding a value A such that 2 + 8 = A + A. One may find that A = (2 + 8)/2 = 5. Switching the order of 2 and 8 to read 8 and 2 does not change the resulting value obtained for A. The mean 5 is not less than the minimum 2 nor greater than the maximum 8. If we increase the number of terms in the list to 2, 8, and 11, the arithmetic mean is found by solving for the value of A in the equation 2 + 8 + 11 = A + A + A. One finds that A = (2 + 8 + 11)/3 = 7.
Pythagorean means
{{#invoke:mainmain}} {{#invoke:see alsoseealso}} Along with the arithmetic mean above, the geometric mean and the harmonic mean are known collectively as the Pythagorean means.
Geometric mean
The geometric mean of n nonnegative numbers is obtained by multiplying them all together and then taking the nth root. In algebraic terms, the geometric mean of a_{1}, a_{2}, …, a_{n} is defined as
Geometric mean can be thought of as the antilog of the arithmetic mean of the logs of the numbers.
Example: Geometric mean of 2 and 8 is
Harmonic mean
Harmonic mean for a nonempty collection of numbers a_{1}, a_{2}, …, a_{n}, all different from 0, is defined as the reciprocal of the arithmetic mean of the reciprocals of the a_{i}Template:'s:
One example where the harmonic mean is useful is when examining the speed for a number of fixeddistance trips. For example, if the speed for going from point A to B was 60 km/h, and the speed for returning from B to A was 40 km/h, then the harmonic mean speed is given by
Inequality concerning AM, GM, and HM
A well known inequality concerning arithmetic, geometric, and harmonic means for any set of positive numbers is
It is easy to remember noting that the alphabetical order of the letters A, G, and H is preserved in the inequality. See Inequality of arithmetic and geometric means.
Thus for the above harmonic mean example: AM = 50, GM = 49, and HM = 48 km/h.
Statistical location
In addition to the mean, the mode, the median, and the midrange are often used in as estimates of central tendency in descriptive statistics.
Mode
{{#invoke:mainmain}} The most frequently occurring number in a list is called the mode. For example, the mode of the list (1, 2, 2, 3, 3, 3, 4) is 3. It may happen that there are two or more numbers which occur equally often and more often than any other number. In this case there is no agreed definition of mode. Some authors say they are all modes and some say there is no mode.
Median
{{#invoke:mainmain}} The median is the middle number of the group when they are ranked in order. (If there are an even number of numbers, the mean of the middle two is taken.)
Thus to find the median, order the list according to its elements' magnitude and then repeatedly remove the pair consisting of the highest and lowest values until either one or two values are left. If exactly one value is left, it is the median; if two values, the median is the arithmetic mean of these two. This method takes the list 1, 7, 3, 13 and orders it to read 1, 3, 7, 13. Then the 1 and 13 are removed to obtain the list 3, 7. Since there are two elements in this remaining list, the median is their arithmetic mean, (3 + 7)/2 = 5.
Summary of types
{{#invoke:see alsoseealso}}
Name  Equation or description 

Arithmetic mean  
Median  The middle value that separates the higher half from the lower half of the data set 
Geometric median  A rotation invariant extension of the median for points in R^{n} 
Mode  The most frequent value in the data set 
Geometric mean  
Harmonic mean  
Quadratic mean (or RMS) 

Generalized mean  
Weighted mean  
Truncated mean  The arithmetic mean of data values after a certain number or proportion of the highest and lowest data values have been discarded 
Interquartile mean  A special case of the truncated mean, using the interquartile range 
Midrange  
Winsorized mean  Similar to the truncated mean, but, rather than deleting the extreme values, they are set equal to the largest and smallest values that remain 
The table of mathematical symbols explains the symbols used below.
Miscellaneous types
Other more sophisticated averages are: trimean, trimedian, and normalized mean, with their generalizations.^{[1]}
One can create one's own average metric using the generalized fmean:
where f is any invertible function. The harmonic mean is an example of this using f(x) = 1/x, and the geometric mean is another, using f(x) = log x.
However, this method for generating means is not general enough to capture all averages. A more general method^{[2]} for defining an average takes any function g(x_{1}, x_{2}, …, x_{n}) of a list of arguments that is continuous, strictly increasing in each argument, and symmetric (invariant under permutation of the arguments). The average y is then the value that, when replacing each member of the list, results in the same function value: g(y, y, …, y) = g(x_{1}, x_{2}, …, x_{n}). This most general definition still captures the important property of all averages that the average of a list of identical elements is that element itself. The function g(x_{1}, x_{2}, …, x_{n}) = x_{1}+x_{2}+ ··· + x_{n} provides the arithmetic mean. The function g(x_{1}, x_{2}, …, x_{n}) = x_{1}x_{2}···x_{n} (where the list elements are positive numbers) provides the geometric mean. The function g(x_{1}, x_{2}, …, x_{n}) = −(x_{1}^{−1}+x_{2}^{−1}+ ··· + x_{n}^{−1}) (where the list elements are positive numbers) provides the harmonic mean.^{[2]}
Average percentage return and CAGR
{{#invoke:mainmain}} A type of average used in finance is the average percentage return. It is an example of a geometric mean. When the returns are annual, it is called the Compound Annual Growth Rate (CAGR). For example, if we are considering a period of two years, and the investment return in the first year is −10% and the return in the second year is +60%, then the average percentage return or CAGR, R, can be obtained by solving the equation: (1 − 10%) × (1 + 60%) = (1 − 0.1) × (1 + 0.6) = (1 + R) × (1 + R). The value of R that makes this equation true is 0.2, or 20%. This means that the total return over the 2year period is the same as if there had been 20% growth each year. Note that the order of the years makes no difference – the average percentage returns of +60% and −10% is the same result as that for −10% and +60%.
This method can be generalized to examples in which the periods are not equal. For example, consider a period of a half of a year for which the return is −23% and a period of two and a half years for which the return is +13%. The average percentage return for the combined period is the single year return, R, that is the solution of the following equation: (1 − 0.23)^{0.5} × (1 + 0.13)^{2.5} = (1 + R)^{0.5+2.5}, giving an average percentage return R of 0.0600 or 6.00%.
Moving average
{{#invoke:mainmain}}
Given a time series such as daily stock market prices or yearly temperatures people often want to create a smoother series.^{[3]} This helps to show underlying trends or perhaps periodic behavior. An easy way to do this is to choose a number n and create a new series by taking the arithmetic mean of the first n values, then moving forward one place and so on. This is the simplest form of moving average. More complicated forms involve using a weighted average. The weighting can be used to enhance or suppress various periodic behavior and there is very extensive analysis of what weightings to use in the literature on filtering. In digital signal processing the term “moving average” is used even when the sum of the weights is not 1.0 (so the output series is a scaled version of the averages).^{[4]} The reason for this is that the analyst is usually interested only in the trend or the periodic behavior. A further generalization is an “autoregressive moving average”. In this case the average also includes some of the recently calculated outputs. This allows samples from further back in the history to affect the current output.
Etymology
"Few words have received more etymological investigation." ^{[5]} In the 16th century average meant a customs duty, or the like, and was used in the Mediterranean area. It came to mean the cost of damage sustained at sea. From that came an "average adjuster" who decided how to apportion a loss between the owners and insurers of a ship and cargo.
Marine damage is either particular average, which is borne only by the owner of the damaged property, or general average, where the owner can claim a proportional contribution from all the parties to the marine venture. The type of calculations used in adjusting general average gave rise to the use of "average" to mean "arithmetic mean".
The root is found in Arabic as awar, in Italian as avaria, in French as avarie and in Dutch as averij. It is unclear in which language the word first appeared.
There is earlier (from at least the 11th century), unrelated use of the word. It appears to be an old legal term for a tenant's day labour obligation to a sheriff, probably anglicised from "avera" found in the English Domesday Book (1085).
See also
{{#invoke:Portalportal}}
References
 ↑ {{#invoke:Citation/CS1citation CitationClass=journal }}
 ↑ ^{2.0} ^{2.1} John Bibby (1974). “Axiomatisations of the average and a further generalisation of monotonic sequences”. Glasgow Mathematical Journal, vol. 15, pp. 63–65.
 ↑ {{#invoke:citation/CS1citation CitationClass=book }}
 ↑ {{#invoke:citation/CS1citation CitationClass=book }}
 ↑ Oxford English Dictionary