Question: How Do You Know If Variance Is High Or Low?

Is variance affected by extreme values?

Common Measures of Variance The range is the difference between the high and low values.

Since it uses only the extreme values, it is greatly affected by extreme values.

The variance is the average squared deviation from the mean..

Do you want a high or low variance?

Low variance is associated with lower risk and a lower return. 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.

How do you know if a standard deviation is high or low?

Low standard deviation means data are clustered around the mean, and high standard deviation indicates data are more spread out. A standard deviation close to zero indicates that data points are close to the mean, whereas a high or low standard deviation indicates data points are respectively above or below the mean.

What is considered a low 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 does variance tell us in statistics?

Variance (σ2) in statistics is a measurement of the spread between numbers in a data set. That is, it measures how far each number in the set is from the mean and therefore from every other number in the set.

How do you interpret a sample variance?

A small variance indicates that the data points tend to be very close to the mean, and to each other. A high variance indicates that the data points are very spread out from the mean, and from one another.