Weighted Average Calculation
Hi,
I'm working with a dataset and am wanting to make sure I am going to get a weighted average of our mortgage rates.
We have loans that range from 100k-400k and each loan has an associated mortgage rate. As an example, we have two loans that go into the same security that are 5% and 5.5%
Loan A is worth 200k and loan B is worth 100k. I need to make sure when I am grouping them into their pools, I am not getting an average of the mortgage rate (5.25%) and am instead getting a weighted average (5.165%)
Any suggestions?
I am working with a MagicETL as well.
Loan A 200k 5% poolC
Loan B 100k 5.5% poolC
If this helps, feel free to agree, accept or awesome it!
Best Answer
-
For this you'll need to get the Value of the rate rather than the %, and then calculate the new percentage as the ratio between the two.
At the row level you'll need to have a value that is the Worth of the Loan times the Mortgage Rate of it. In your example for Loan A = 10K and for Loan B = 5.5K. Instead of averaging the % (which is almost never a good idea) you'll work with these values. (10 + 5.5)/(200 + 100) = 5.167% which is what you want. In a single beast mode this can be written as:
SUM(`Worth` * `Mortgage Rate`)/SUM(`Worth`)
Which will work on the aggregation level used for your data.
1
Answers
-
For this you'll need to get the Value of the rate rather than the %, and then calculate the new percentage as the ratio between the two.
At the row level you'll need to have a value that is the Worth of the Loan times the Mortgage Rate of it. In your example for Loan A = 10K and for Loan B = 5.5K. Instead of averaging the % (which is almost never a good idea) you'll work with these values. (10 + 5.5)/(200 + 100) = 5.167% which is what you want. In a single beast mode this can be written as:
SUM(`Worth` * `Mortgage Rate`)/SUM(`Worth`)
Which will work on the aggregation level used for your data.
1 -
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