Forum Discussion
Usage average should have returned zero
Hi Folks,
I am a bit puzzled why when using Average the result did not return (0)
There is two examples:
Example A: starts and ends with a value of 1000 and returns 0.027%
Example B: starts and ends with a value of 1000 and returns 0.000%
Should Example A not have returned 0.000% too?
Perhaps the 'Average' formula is wrong
Don't know the application of this but you seem to be comparing two very different things.
Example A starts and ends with a value of 1000 but there are changes in between. The average that is computed in Example A is the average of the % change there is between each observation.
Example B always has 1000 as values in each observation and therefore, there is no % change between them. Consequently, when calculating the average % change amongst all observation it will be 0.
- You are probably right, it's just how I have been looking at it.
Thanks for viewpoint.
The changes do sum to zero and, hence, so does the average of the changes. If you express that as a percentage of the initial 1000, it still works. Where it all falls apart is when you express each change as the percentage of the prior value. There is no reason at all to expect such percentages to cancel.
- So its the changes taking place using percentage that the problem
Interesting.
Thank youExactly. This can be seen from the fact that an 80% decrease followed by an 80% increase does not return you to the start.
1000 --> 200 --> 360
To get back to 1000 would require a 400% increase, and -80% + 400% ≠ 0.
