Compound Annual Growth Rate (CAGR) is a measure of the annual growth rate of an investment over a specific period of time, taking into account the effect of compounding. It is a smoothed rate of return that can be used to compare the growth rates of different investments. CAGR is calculated using the initial and ending values of an investment and the number of years over which the investment grew. The formula for CAGR is:

$$CAGR = \left(\frac{End Value}{Start Value}\right)^{\frac{1}{Number of Years}} - 1$$

CAGR is often used to compare growth rates from various data sets of common domain such as revenue growth of companies in the same industry or sector. It is particularly useful to compare growth rates when growth rates are expected to be volatile and inconsistent. CAGR assumes compounded growth, meaning any return on the investment is reinvested. It offers a rate of return over a specific period of time, so if you use CAGR to compare two different investments, you must use the same time period for both calculations. CAGR gives a smoothed-out rate of return, so any inherent risks or volatility of an investment will not be shown.