Arithmetic Average: When to Use It and When Not

Arithmetic Average Has Strengths and Weaknesses

Arithmetic average is the most popular measure of central tendency and (the reason for its popularity is that) it is the easiest one to calculate. However, like every other statistical measure, arithmetic average has strengths and weaknesses and it is more suitable in some situations than in others. The following is a summary of situations when using arithmetic average is appropriate and those when arithmetic average should be replaced or complemented by other measures.

When to Use Arithmetic Average

When Not to Use Arithmetic Average (Alone)

Getting a More Complete Picture

In many cases it helps to use arithmetic average together with other measures, such as median or standard deviation. You can easily calculate these and other statistics in Excel using the Descriptive Statistics Calculator.

Related pages

stock price volatility calculatorcovariance formula statisticsweighted average cost formula inventoryblack scholes 76calculate excel formulablack sholes formulastandard deviation variance calculatorindicative price meaningcalculate population meanwhat is the median function in exceloption theta formulainverse vix etfweighted average percentage excelsum of squares in excelvix futures term structurehow to calculate average deviations&p futures symbolexplanation of quantitative easingkurtosis interpretationhow to calculate deviation in excelstandard deviation formula calculatormarket value weighted indexaapl stock price historysharpe ratio meaningblack scholes equationdelta hedgegeometric average return formulahistorical implied volatility chartimplied volatility black scholescall option payoff diagramtrade the vixexcel normdistform 13f filingscalculate mean sdvariance formula financevolatility calculatoraveraging down calculatorcost of preferred equityformula for mean variance and standard deviationexample of stock indexannualize daily returnsblack scholecalculate realized volatilityvixy proshareshow to calculate no of days in excel 2007return calculator excelexponential moving average excel formulaoption payoff chartdelta formulasnatural log excelhow to calculate portfolio weightvix futures trading hoursprice weighted index formulacalculation of skewness and kurtosisstrike price put optionvariance and covariance formuladelta hedging exampleshort vixweighted average cost calculatoretf listshow many shares in 1 option contractvix futures quotestandard deviation frequency calculator13f filings searchetf listsnorm s dist excelhedge fund techniquesstock straddleblack sholes equationprofit loss formula in excelhow to calculate implied volatility of a stockformula for calculating variance in statistics