The term variance refers to a statistical measurement of the spread between numbers in a data set. More specifically, variance measures how far each number in the set is from the mean and thus from every other number in the set. Variance is often depicted by this symbol: σ2.
Contents
What is variance in simple terms?
In probability theory and statistics, the variance is a way to measure how far a set of numbers is spread out. Variance describes how much a random variable differs from its expected value. The variance is defined as the average of the squares of the differences between the individual (observed) and the expected value.
What does this word mean variance?
Definition of variance
1 : the fact, quality, or state of being variable or variant : difference, variation yearly variance in crops. 2 : the fact or state of being in disagreement : dissension, dispute. 3 : a disagreement between two parts of the same legal proceeding that must be consonant.
How do you calculate variance?
How to Calculate Variance
- Find the mean of the data set. Add all data values and divide by the sample size n.
- Find the squared difference from the mean for each data value. Subtract the mean from each data value and square the result.
- Find the sum of all the squared differences.
- Calculate the variance.
Is a high variance good or bad?
High-variance stocks tend to be good for aggressive investors who are less risk-averse, while low-variance stocks tend to be good for conservative investors who have less risk tolerance. Variance is a measurement of the degree of risk in an investment.
What is variance in statistics for dummies?
The variance is a way of measuring the typical squared distance from the mean and isn’t in the same units as the original data. Both the standard deviation and variance measure variation in the data, but the standard deviation is easier to interpret.
What does variance mean in business?
Variance is the difference between the budgeted/planned costs and the actual costs incurred.Businesses often carry out variance analysis – a quantitative investigation into the differences between planned and actual costs and revenues. Variance analysis can be applied to both revenues and expenses.
What is variance in writing?
The variance is a measure of variability. It is calculated by taking the average of squared deviations from the mean. Variance tells you the degree of spread in your data set.
What is variance in healthcare?
A patient variance is an irregularity that is associated with the patient themselves and not the health care provider or the facility. For example, the development of a pressure ulcer secondary to the patient’s immobility and poor nutritional status is an example of a patient related variance.
Does variance have a unit?
Variance is the average of the squared distances from each point to the mean.One problem with the variance is that it does not have the same unit of measure as the original data. For example, original data containing lengths measured in feet has a variance measured in square feet.
What is variance of population?
Population variance (σ2) tells us how data points in a specific population are spread out. It is the average of the distances from each data point in the population to the mean, squared.
What is the variance of the first 10 natural numbers 1 to 10?
To elaborate: Variance = frac{1}{10} [1^2 + 2^2 +… + 10^2] – frac{1}{20}[1 + 2 +…. 10]^2 = 38.5 – 30.25 = 8.25.
What is good variance?
As a rule of thumb, a CV >= 1 indicates a relatively high variation, while a CV < 1 can be considered low. This means that distributions with a coefficient of variation higher than 1 are considered to be high variance whereas those with a CV lower than 1 are considered to be low-variance.
What is an acceptable variance?
What are acceptable variances? The only answer that can be given to this question is, “It all depends.” If you are doing a well-defined construction job, the variances can be in the range of ± 3–5 percent. If the job is research and development, acceptable variances increase generally to around ± 10–15 percent.
What is the variance of a stock?
A stock’s historical variance measures the difference between the stock’s returns for different periods and its average return. A stock with a lower variance typically generates returns that are closer to its average.
How do you interpret variance?
A large variance indicates that numbers in the set are far from the mean and far from each other. A small variance, on the other hand, indicates the opposite. A variance value of zero, though, indicates that all values within a set of numbers are identical. Every variance that isn’t zero is a positive number.
What is std deviation and variance?
Standard deviation looks at how spread out a group of numbers is from the mean, by looking at the square root of the variance. The variance measures the average degree to which each point differs from the mean—the average of all data points.
What does variance requested mean?
A variance is a request to deviate from current zoning requirements. If granted, it permits the owner to use the land in a manner not otherwise permitted by the zoning ordinance.
What does variance mean in accounting?
In budgeting (or management accounting in general), a variance is the difference between a budgeted, planned, or standard cost and the actual amount incurred/sold. Variances can be computed for both costs and revenues.
What are variances and why do they exist?
An unfavorable, or negative, budget variance is indicative of a budget shortfall, which may occur because revenues miss or costs come in higher than anticipated. Variances may occur for internal or external reasons and include human error, poor expectations, and changing business or economic conditions.
What is an activity variance and what does it mean?
An activity variance is the difference between a revenue or cost item in the flexible budget and the same item in the static planning budget. An activity variance is due solely to the difference in the actual level of activity used in the flexible budget and the level of activity assumed in the planning budget.