Volatility drag
The gap between the arithmetic average return and the actual growth of capital: the more the result swings, the less compounding delivers for the same average.
Formula
An approximation: the geometric return is roughly the arithmetic mean less half the variance. Both quantities are stored as fractions rather than percentages.
How to read the number
Two consequences follow: reducing swings at an unchanged average return raises the final capital by itself, and a fall followed by a rise of equal size does not return you to where you started.
When the metric lies
Also known as: variance drain