The standard deviation helps estimate the spread or variation in a dataset. It can be used to compare two datasets only if they share the same scale or units, such as degrees Celsius, and have similar means.
So, datasets with significantly different means and scales of measurements can instead be compared using the coefficient of variation. The higher the variation in the datasets, the larger the coefficient of variation.
The sample and population coefficient of variation is the ratio of the standard deviation to the mean, expressed as a percentage.
Consider the meteorological reports on the temperature and rainfall, recorded over five months in a year. On computing the coefficient of variation for both these datasets, one observes that fluctuations in temperature are far less than that of rainfall.
Financially, the coefficient of variation allows investors to determine the price volatility in a stock investment or real estate. An investment with a lower coefficient of variation is less volatile and a safer investment.&#160; &#160;

coefficient of variation

The coefficient of variation measures the dispersion of the data points or distribution around the mean. Using the coefficient of variation, we can compare two data series with drastically different means or different units of measurement. The coefficient of variation for a sample and a population is expressed as a percentage of the ratio of standard deviation to the mean.
The coefficient of variation is a practical statistical tool in finance. It allows investors to assess the volatility or risk and the returns associated with their investments. An investment with a low coefficient of variation has lower volatility or risk, and hence it is safer than one with a high coefficient of variation.

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Coefficient of Variation

The coefficient of variation measures the dispersion of the data points or distribution around the mean. Using the coefficient of variation, we can ...

Education

JoVE Core

Statistics

Unit 1

Measures of Variation

KEY TERMS AND CONCEPTS

what is variation?

What is Variation?

Apart from the measures of central tendency, distribution, outliers, and the changing characteristics of data with time, an important characteristic of ...

range

Range

The range is one of the measures of variation. It can be defined as the difference between a dataset&#39;s highest and lowest values. For example, in the ...

standard deviation

Standard Deviation

The most commonly used measure of variation is the standard deviation. It is a numerical value measuring how far data values are from their mean. The ...

standard error of the mean

Standard Error of the Mean

The sampling variability of a statistic is defined as how much the statistic varies from one sample to another. The sampling variability of a statistic is ...

calculating standard deviation

Calculating Standard Deviation

The standard deviation is the most common measure of variation. It is a value that tells us how far a data value is from the mean value in a dataset. ...

variance

Variance

&#160;The deviations show how spread out the data are about the mean. A positive deviation occurs when the data value exceeds the mean, whereas a negative ...

range rule of thumb to interpret standard deviation

range-rule-of-thumb-to-interpret-standard-deviation

Range Rule of Thumb to Interpret Standard Deviation

The range rule of thumb in statistics helps us calculate a dataset&#39;s minimum and maximum values with known standard deviation. This rule is based on ...

empirical method to interpret standard deviation

empirical-method-to-interpret-standard-deviation

Empirical Method to Interpret Standard Deviation

The empirical rule, also known as the three-sigma rule, allows a statistician to interpret the standard deviation in a normally distributed dataset. The ...

chebyshev's theorem to interpret standard deviation

chebyshev-s-theorem-to-interpret-standard-deviation

Chebyshev's Theorem to Interpret Standard Deviation

Chebyshev&#8217;s theorem, also known as Chebyshev&#8217;s Inequality, states that the proportion of values of a dataset for K standard deviation is ...

mean absolute deviation

Mean Absolute Deviation

The mean absolute deviation is also a measure of the variability of data in a sample. It is the absolute value of the average difference between the data ...

key terms and concepts

3.1K Views. The coefficient of variation measures the dispersion of the data points or distribution around the mean. Using the coefficient of variation, we can compare two data series with drastically different means or different units of measurement. The coefficient of variation for a sample and a population is expressed as a percentage of the ratio of standard deviation to the mean. The coefficient of variation is a practical statistical tool in finance. It allows investors to assess the volatility or ri...

Video: Coefficient of Variation

statistics

JoVE Core Statistics introduces the concepts and application of the collection, analysis, presentation, and interpretation of data to students. These animated lessons provide an understanding of statistics beneficial to students from a wide range of disciplines. Additionally, the scientist-in-action videos demonstrate the application of related concepts in classical and original research experiments performed in today's laboratories worldwide

4.7 : Coefficient of Variation

4.7 : Coefficient of Variation

4.1 : What is Variation?

4.2 : Range

4.3 : Standard Deviation

4.4 : Standard Error of the Mean

4.5 : Calculating Standard Deviation

4.6 : Variance

4.8 : Range Rule of Thumb to Interpret Standard Deviation

4.9 : Empirical Method to Interpret Standard Deviation

4.10 : Chebyshev's Theorem to Interpret Standard Deviation

4.11 : Mean Absolute Deviation