What are some examples of variance in statistics?

What are some examples of variance in statistics?

Variance is a measure of how much values in a dataset differ from the mean. For example, in a dataset of test scores, if most students score around 70 but a few score much lower or higher, the variance will be high.

Can you give me a real-world example?

Sure! In finance, the variance of stock returns can indicate the risk associated with an investment. A stock with high variance has returns that fluctuate widely, suggesting higher risk.

How is variance calculated?

Variance is calculated by taking the average of the squared differences from the mean. The formula is: Variance = Σ (xi - μ)² / N, where xi represents each value, μ is the mean, and N is the number of values.

What does a high variance indicate?

A high variance indicates that the data points are spread out over a wider range of values, suggesting more variability and less predictability in the dataset.