Enter the values of each data point and the mean into the calculator to determine the variance.
Mean Variance Formula
The following formula is used to calculate the mean variance.
V = Σ((x - μ)^2) / N
Variables:
- V is the variance
- x represents each value in the data set
- μ is the mean of the data set
- N is the total number of values in the data set
To calculate the variance, subtract the mean from each value in the data set, square the result, and then sum up all these values. Finally, divide this sum by the total number of values in the data set.
What is a Mean Variance?
Mean variance is a statistical concept used in finance and investing that refers to the average of the squared deviations from the mean of a data set. It is a measure of the dispersion or spread in a distribution of data. In the context of investing, mean variance analysis is used to balance the risk and return in a portfolio. It helps investors to decide how to allocate their investments among different assets to achieve a desired level of return while minimizing risk.
How to Calculate Mean Variance?
The following steps outline how to calculate the Mean Variance using the given formula:
- First, calculate the mean (μ) of the data set.
- Next, subtract the mean (μ) from each value (x) in the data set.
- Next, square each of the differences obtained in the previous step.
- Next, sum up all the squared differences obtained in the previous step.
- Finally, divide the sum of squared differences by the total number of values (N) in the data set.
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem:
Use the following variables as an example problem to test your knowledge:
x = [5, 8, 10, 12, 15]
μ = 10
N = 5
