Variance

What Does Variance Mean?
A measure of the dispersion of a set of data points around their mean value. Variance is a mathematical expectation of the average squared deviations from the mean.

Investopedia explains Variance
Variance measures the variability (volatility) from an average. Volatility is a measure of risk, so this statistic can help determine the risk an investor might take on when purchasing a specific security.

Related Terms

Coefficient Of Variation
Ex-Post Risk
Heteroskedasticity
Mean
Risk
Semivariance
Standard Deviation
Variance Swap
Volatility
Volatility Swap
More Related Terms

Related Links

Understanding Volatility Measurements - How do you choose a fund with an optimal risk-reward combination? We teach you about standard deviation, beta and more!
Exploring The Exponentially Weighted Moving Average - Learn how to calculate a metric that improves on simple variance.
When Time And Data Won't Stand Still - What to know about stationary and non-stationary processes before you try to model or forecast.
The Uses And Limits Of Volatility - Check out how the assumptions of theoretical risk models compare to actual market performance.
Is tracking error a significant measure for determining ex-post risk?
Does Your Investment Manager Measure Up? - These key stats will reveal whether your advisor is a league leader or a benchwarmer.
What Volatility Really Means - When it comes to volatile, high-risk stocks, it's often much easier to talk the talk than it is to walk the walk.

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