Variance vs Standard Deviation

Difference Between Variance vs Standard Deviation

Variance vs Standard deviation are the most widely used statistical mathematical concepts, but they also play vital roles throughout the financial field which includes the areas of economics, accounting and investing.

Dispersion another statistical jargon that indicates the extent to which the samples or the observations that deviate from the measure (which needs to be appropriate) of the central tendency. Measures of dispersion will fall into 2 categories which are

• A relative measure of dispersion and
• An absolute measure of dispersion.

Variance vs Standard Deviation are the 2 types of an absolute measure of variability; which describes how the samples or the observations are spread out around the average or the mean. Variance can be interpreted as the average of the squares of the deviations.

Unlike variance, the standard deviation is the square root of the value (numerical) which shall be obtained while one is calculating the variance. Most of the people contrast these 2 mathematical concepts and we shall discuss the same.

Head To Head Comparison Between Variance vs Standard Deviation (Infographics)

Below is the top 7 difference between Variance vs Standard Deviation

Key Differences Between Variance vs Standard Deviation

Both Variances vs Standard Deviation are popular choices in the market; let us discuss some of the major Difference Between Variance vs Standard Deviation

• Variance is the numerical value that will describe the variability of the individuals or the observations from its arithmetic average of the mean. On the other hand, Standard deviation is another measure of dispersion of the individuals or the observations within a given set of data.
• Variance, as stated earlier, will measure how far the individuals or the observations in a group or sample are spread out. On the flip side, Standard Deviation will measure how much the individuals or the observations of a given data set differs from its arithmetic average or the mean.
• Variance can be denoted or label by sigma-squared (σ²) whereas the standard deviation can be denoted or labeled as sigma (i.e. σ).
• Variance, as stated earlier, is nothing but an average or the mean of the squared deviations. On another hand, the standard deviation will be the root mean or average squared deviation.
• Variance is always expressed in the square units and which are generally larger or say greater than the values of the observations or the individuals in the given set of the data. As opposed to the variance, standard deviation that can be expressed in the same units as the values of the observations or the individuals in the given set of data.

Variance vs Standard Deviation Comparison Table

Below is the 7 topmost comparison between Variance vs Standard Deviation

Conclusion – Variance vs Standard Deviation

Both Variance vs Standard Deviation is widely common mathematical concepts used in the field of statistics and probability theory as the measures of the variance or the spread. Variance as we discussed is a dispersion absolute measure of how far the observations or the values are actually spread or they vary in a given set of data from their arithmetic average or the arithmetic mean, whereas standard deviation on another hand is a measure of dispersion (again an absolute measure) of the observations or the values that are relative to the average or the mean. Variance can be calculated as average or mean squared deviation of each observation or the value from the mean in a given set of data, whereas the standard deviation is nothing but simply taking the square root of the variance calculated. The standard deviation as stated earlier is measured in the similar unit as the average or the mean, and to the contrary variance is measured in the squared unit of the average or the mean. Both Variance vs Standard Deviation has their own purpose. Variance is more like a term which is mathematical in nature whereas the standard deviation is mostly used to describe the variability of the given data in a set.

However, there is some identical between them that is both the Variance vs Standard Deviation are always positive. And, if all the given observations in a given set of data are similar or say are identical, then the variance and the standard deviation both will be zero.

These 2 are the most basic statistical terms, which are playing an important role in the various sectors. Standard deviation is mostly preferred over the average or the mean as mentioned earlier it is expressed in the similar units as those of the measurements while on the other hand the variance which is mostly expressed in the units that are greater or say larger than the given set of the data.

Lastly, these two concepts are used to measure market volatility, which helps in creating a profitable trade strategy.

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