what is average return 
the average return is the simple mathematical average of a series of returns generated over a specified period of time an average return is calculated the same way that a simple average is calculated for any set of numbers the numbers are added together into a single sum then the sum is divided by the count of the numbers in the set understanding average returnthere are several return measures and ways to calculate them for the arithmetic average return one takes the sum of the returns and divides it by the number of return figures average return sum of returnsnumber of returns text average return dfrac text sum of returns text number of returns average return number of returnssum of returns the average return tells an investor or analyst what the returns for a stock or security have been in the past or what the returns of a portfolio of companies are the average return is not the same as an annualized return as it ignores compounding average return exampleone example of average return is the simple arithmetic mean for instance suppose an investment returns the following annually over a period of five full years 10 15 10 0 and 5 to calculate the average return for the investment over this five year period the five annual returns are added together and then divided by 5 this produces an annual average return of 8 now let s look at a real life example shares of walmart returned 9 1 in 2014 lost 28 6 in 2015 gained 12 8 in 2016 gained 42 9 in 2017 and lost 5 7 in 2018 the average return of walmart over those five years is 6 1 or 30 5 divided by 5 years calculating returns from growththe simple growth rate is a function of the beginning and ending values or balances it is calculated by subtracting the ending value from the beginning value and then dividing by the beginning value the formula is as follows growth rate bv evbvwhere bv beginning valueev ending value begin aligned text growth rate dfrac text bv text ev text bv textbf where text bv text beginning value text ev text ending value end aligned growth rate bvbv ev where bv beginning valueev ending value for example if you invest 10 000 in a company and the stock price increases from 50 to 100 then the return can be calculated by taking the difference between 100 and 50 and dividing by 50 the answer is 100 which means you now have 20 000 the simple average of returns is an easy calculation but it is not very accurate for more accurate calculations of returns analysts and investors also frequently use the geometric mean or the money weighted rate of return average return alternatives