- The coefficient of variation is worth using, among others because of its accuracy. It helps to compare large databases accurately. Standard deviation works best if the harvest has the same population
- To calculate the value of the coefficient of variation, the following formula should be used: coefficient of variance = (standard deviation / mean) * 100
- This method may also be useful for businessmen and entrepreneurs. Allows you to assess the risks in relation to the planned investment
Variation coefficient It is particularly useful when it becomes necessary to analyze the results of two different and unique tests or reviews that have completely different measures or characteristics. It is used, for example, in studies that differ in terms of recording methods and components.
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Measurement of Distribution Difference – What is it?
Diversity Diversity Scale It is a type of distribution measurement that describes the relationship between individual distributions. They should differ from each other in the dispersion (differentiation) of the attribute values around the central values. Differentiation metrics include:
- standard deviation,
- the differences
- mean absolute deviation,
- the difference,
- quarter sign
- quarter deviation,
- Variation coefficient.
standard deviation It is one of the most widely used statistical concepts besides the arithmetic mean. It’s the square root of the variance. It tells you how broad the values are (age, exchange rate, economic inflation) of a certain size scattered about the average of that size. In this case, it is assumed that the smaller the values of deviation, the more focused the observations should be on the mean. can distinguish:
- The standard deviation of a random variable,
- society standard deviation,
- The sample standard deviation.
difference While it is a classic measure of volatility. It is identified with the diversity of the community. It is the arithmetic mean of the squared deviations (differences) of certain values of a given feature from the expected value. It means absolute deviationOr mean deviation, is the arithmetic mean of the absolute deviations of all the elements of the set Statistical data.
The range is the difference between the largest and smallest value of a specific statistical feature in a given set. It can also be the difference between the lowest and highest observed value of the variable. In addition, it is simpler than Dispersion measures. Unfortunately, it is inaccurate due to the fact that it is based on two supervised values of the variable without taking into account the effect of others on the value. It is used, among other things in pedagogy and psychology when analyzing quantitative results of exams.
Quarter rangeOr, in other words, the quartile range, which defines the difference between the first and third quartiles (a measure of the observation position). The greater its width, the greater the differentiation of the feature. It is also worth noting tetragonal. It is half the range of a quartile, and therefore half of the difference between the first and third quartiles.
However, it turned out to be especially important Variation coefficient. Its high value proves the great diversity of a particular feature, for example, the heterogeneity of the studied population. On the other hand, a low value determines a small diversity of the trait, and therefore – homogeneity of the population.
Coefficient of Variation – How do we calculate it?
to count Variation coefficient valueuse the formula:
Coefficient of Variation = (standard deviation/mean) * 100.
Here are the individual formula symbols:
- Variation coefficient – V,
- standard deviations,
- Arithmetic mean – “x” with a horizontal dash above it.
for Excel Variation coefficient It can also be calculated using the formulas for standard deviation and mean.
It should be remembered that the value of the coefficient of variation is expressed as a percentage. However, the interpretation depends mainly on the magnitude of the modulus and looks like this:
- very low volatility – less than 25%,
- average volatility – in the range of 25% up to 45%,
- strong volatility – from 45 per cent up to 100%,
- Extremely high volatility – more than 100%
Variation coefficient So it is a very similar measure standard deviation. This is because they both share a similar interpretation. The only difference between them is the application. The described method turned out to be very effective especially when comparing trait variance in two populations. standard deviation It may, in turn, be less useful.
In addition, the coefficient of variation is also used when the researcher is wondering about fluctuations between different scales. For example, it is used when the results of intelligence tests are compared with the results of Woodcock-Johnson III cognitive tests. However, it must be remembered that this method should only be used to analyze positive information on a proportional scale.
Coefficient of variation – why is it worth using it?
As evidenced by our work tutorialAnd The coefficient of variation is worth using, among others because of its accuracy. It helps to compare large databases accurately. If the harvester has the same population, it works better standard deviationHowever, in case the comparison concerns two different statements, the described factor may be used. It is useful, among other things for stocks, ETFs, and bonds.
The method also works when it is necessary to find data repeatability. An example is the evaluation of measurement errors or their level. In this case, the value of the coefficient depends on the difference between the sampling units or between different readings taken by one person.
Moreover, this option is useful in understanding data consistency because it measures the congruence of different values of a set with the mean of a data set. Besides, it can also control risk With regard to investment. Thanks to this, it is also a great tool for making the best decision.
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