Variability

Variability
• Define
– Range
– Variance
– Standard Deviation
– Coefficient of Variation
• When might we prefer one measure of
variability to another?
Central Tendency refers to the
Middle of the Distribution
Variability is about the Spread
Samples of Dispersions

5
Influence of Distribution
Shape
Variability and Dispersion

• Range = maximum-minimum
= highest score minus lowest
score.
– 12 14 14 16 16 18 20 ; range=20-12=8
Variance
2   ( X   ) 2

• Population Variance: N
• Where  2means population variance,
•  means population mean, and the other
terms have their usual meaning.
• The variance is equal to the average squared
deviation from the mean.
• To compute, take each score and subtract the
mean. Square the result. Find the average
over scores. That is the variance.
Computing the Variance
(N=5) X  X   ( X   )2
5 15 -10 100
10 15 -5 25
15 15 0 0
20 15 5 25
25 15 10 100
Total: 75 0 250
Mean: Variance Is  50
Standard Deviation
• Variance is average squared deviation
from the mean.
• To return to original, unsquared units,
we just take the square root of the
variance. This is the standard
deviation.
• Population formula:
  ( X  ) 2

N
Comparing Standard Deviations

 X i    2
 
N

 X i  X 
2
s =
n 1
Sample Standard Deviation
• Sometimes called the root-mean-square
deviation from the mean. This name
says how to compute it from the inside
out.
• Find the deviation (difference between
the score and the mean).
• Find the deviations squared.
• Find their sum and divide by n-1.
• Take the square root.
Computing the Standard
Deviation
(N=5) X  X   ( X  ) 2

5 15 -10 100
10 15 -5 25
15 15 0 0
20 15 5 25
25 15 10 100
Total: 75 0 250
Mean: Variance Is  50
Sqrt Sigma Is   50  7.07
Compute Sample Standard
Deviation using :
 X i  X 
2
s =
n 1
Standard deviation for
Grouped Data
Comparing Standard Deviations
Data A
Mean = 15.5
11 12 13 14 15 16 17 18 19 20 21 s = 3.338

Data B
Mean = 15.5
11 12 13 14 15 16 17 18 19 20 21 s = .9258
Data C
Mean = 15.5
11 12 13 14 15 16 17 18 19 20 21 s = 4.57
 Coefficient of Variation
•Measure of Relative Variation
•Always a %
•Shows Variation Relative to Mean
•Used to Compare 2 or More Groups
•Formula ( for Sample):

S 
CV     100%
X 
 Comparing Coefficient of Variation

• Stock A: Average Price last year = $50

• Standard Deviation = $5
• Stock B: Average Price last year = $100
• Standard Deviation = $5
Coefficient of Variation:
S 
CV     100% Stock A: CV = 10%
X 
Stock B: CV = 5%
Review
• Range
• Variance
• Standard Deviation
• Coefficient of Variation
Homework # 2
• # 6,#7; p. 137