What is CAGR?
Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified time period longer than one year.
Why use CAGR?
Unlike absolute return, which just tells you the total percentage gained, CAGR smoothes out the volatility and tells you what the investment would have yielded if it had grown at a steady rate every single year.
Formula
CAGR = (Ending Value / Beginning Value) ^ (1 / Number of Years) - 1