Variance: Difference between revisions
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1. | 1. | ||
A statistical measure of the spread of given data around their mean. | A statistical measure of the spread of given data around their mean. | ||
The greater the variance, the greater the spread. The variance is calculated from the mean as the average of the squared differences of each data point from the mean. | The greater the variance, the greater the spread. The variance is calculated from the mean as the average of the squared differences of each data point from the mean. | ||
Sampling may be used to estimate the variance of an underlying parent population from the variance of a sample selected from the parent population. | Sampling may be used to estimate the variance of an underlying parent population from the variance of a sample selected from the parent population. | ||
The estimated variance of the parent population is greater than the variance of the sample by a factor of n/[n-1] | The estimated variance of the parent population is greater than the variance of the sample by a factor of n/[n-1] | ||
(where n = the number of items in the sample). | (where n = the number of items in the sample). | ||
2. | 2. | ||
More generally, the degree of variability in an item, especially the degree of variabilty over time. | More generally, the degree of variability in an item, especially the degree of variabilty over time. | ||
Variance in this wider sense may be quantified in a number of different ways (which can include the stricter statistical measure of variance, as defined in 1. above). | Variance in this wider sense may be quantified in a number of different ways (which can include the stricter statistical measure of variance, as defined in 1. above). | ||
3. | 3. | ||
More generally still, any difference, especially a difference between two related financial variables. | More generally still, any difference, especially a difference between two related financial variables. | ||
For example in management accounting, the difference between the actual cost of an item and the budgeted cost. | For example in management accounting, the difference between the actual cost of an item and the budgeted cost. | ||
== See also == | == See also == | ||
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* [[Minimum variance portfolio]] | * [[Minimum variance portfolio]] | ||
* [[Standard deviation]] | * [[Standard deviation]] | ||
Revision as of 10:32, 14 August 2013
1.
A statistical measure of the spread of given data around their mean.
The greater the variance, the greater the spread. The variance is calculated from the mean as the average of the squared differences of each data point from the mean.
Sampling may be used to estimate the variance of an underlying parent population from the variance of a sample selected from the parent population.
The estimated variance of the parent population is greater than the variance of the sample by a factor of n/[n-1] (where n = the number of items in the sample).
2.
More generally, the degree of variability in an item, especially the degree of variabilty over time.
Variance in this wider sense may be quantified in a number of different ways (which can include the stricter statistical measure of variance, as defined in 1. above).
3.
More generally still, any difference, especially a difference between two related financial variables.
For example in management accounting, the difference between the actual cost of an item and the budgeted cost.
