Variance is a measurement of the spread between numbers in a data set. The variance measures how far each number in the set is from the mean. Variance is calculated by taking the differences between each number in the set and the mean, squaring the differences (to make them positive) and dividing the sum of the squares by the number of values in the set.

Variance is one of the key parameters in asset allocation. Along with correlation, variance of asset returns helps investors to develop optimal portfolios by optimizing the return-volatility trade-off in investment portfolios. Risk or volatility is often expressed as a standard deviation rather than variance because the former is more easily interpreted.

Returns for a stock are 10% in year 1, 20% in year 2 and -15% in year 3. The average of these three returns is 5%. The differences between each return and the average are 5%, 15%, and -20% for each consecutive year. Squaring these deviations yields 25%, 225% and 400%, respectively; summing these squared deviations gives 650%. Dividing the sum of 650% by the number of returns in the data set (3 in this case) yields the variance of 216.67%. Taking the square root of the variance yields the standard deviation of 14.72% for the returns.

onlinelibrary.wiley.com [PDF]

… in paradigm between the one presented by Bachelier [36] and the modern finance one known … 2.2.3. The actual replication process According to standard financial economics [20(b)], the payoff … on variance, but on mean average deviation, but it is expressed in terms of variance …

www.sciencedirect.com [PDF]

… in paradigm between the one presented by Bachelier [36] and the modern finance one known … 2.2.3. The actual replication process According to standard financial economics [20(b)], the payoff … on variance, but on mean average deviation, but it is expressed in terms of variance …

www.tandfonline.com [PDF]

… in paradigm between the one presented by Bachelier [36] and the modern finance one known … 2.2.3. The actual replication process According to standard financial economics [20(b)], the payoff … on variance, but on mean average deviation, but it is expressed in terms of variance …

www.tandfonline.com [PDF]

… in paradigm between the one presented by Bachelier [36] and the modern finance one known … 2.2.3. The actual replication process According to standard financial economics [20(b)], the payoff … on variance, but on mean average deviation, but it is expressed in terms of variance …

www.worldscientific.com [PDF]

… in paradigm between the one presented by Bachelier [36] and the modern finance one known … 2.2.3. The actual replication process According to standard financial economics [20(b)], the payoff … on variance, but on mean average deviation, but it is expressed in terms of variance …

www.tandfonline.com [PDF]

… in paradigm between the one presented by Bachelier [36] and the modern finance one known … 2.2.3. The actual replication process According to standard financial economics [20(b)], the payoff … on variance, but on mean average deviation, but it is expressed in terms of variance …

link.springer.com [PDF]

… in paradigm between the one presented by Bachelier [36] and the modern finance one known … 2.2.3. The actual replication process According to standard financial economics [20(b)], the payoff … on variance, but on mean average deviation, but it is expressed in terms of variance …

www.sciencedirect.com [PDF]

… in paradigm between the one presented by Bachelier [36] and the modern finance one known … 2.2.3. The actual replication process According to standard financial economics [20(b)], the payoff … on variance, but on mean average deviation, but it is expressed in terms of variance …

www.tandfonline.com [PDF]

… in paradigm between the one presented by Bachelier [36] and the modern finance one known … 2.2.3. The actual replication process According to standard financial economics [20(b)], the payoff … on variance, but on mean average deviation, but it is expressed in terms of variance …

www.tandfonline.com [PDF]

… in paradigm between the one presented by Bachelier [36] and the modern finance one known … 2.2.3. The actual replication process According to standard financial economics [20(b)], the payoff … on variance, but on mean average deviation, but it is expressed in terms of variance …

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A nature variance is the difference between actual costs and budgeted costs that results in either over-production or under-production.

There are two types of variances; effect and nature.

Over production means that more units were produced than needed by customers while under production means that fewer units were produced than needed by customers.

An effect variance is the difference between actual costs and budgeted costs that results in either over-budgeting or under-budgeting.

You will need to look at your sales records as well as your inventory records .

Variance is a measurement of the spread between numbers in a data set. The variance measures how far each number in the set is from the mean.

Asset allocation uses volatility as one factor when determining an optimal portfolio for investors. Volatility is often expressed as standard deviation rather than variance because it's easier to interpret.

Calculate by taking differences between each number and the mean, squaring those differences (to make them positive) and dividing the sum of squares by the number of values in a set.

A variance represents the difference between a budgeted, planned, or standard cost and the actual amount incurredsold.

This happens because there was not enough time for planning due to unforeseen circumstances .

Variances can be divided according to their effect on the performance of an entity or company.

Correlation measures how two or more variables are related to one another, while variance measures how much each value differs from the mean.

You will need to look at your sales records as well as your inventory records .