Coefficient of Variance
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The document discusses the coefficient of variance (CoV), defined as the ratio of standard deviation to the mean and also known as relative standard deviation, often expressed as a percentage. It has applications in evaluating risk in finance and demonstrating variance in data distributions but has limitations, including its inapplicability to non-ratio level data and sensitivity to small sample sizes. Overall, while useful for comparison across heterogeneous data sets, caution is needed in its application due to potential inaccuracies.
Coefficient of Variance
- 1. FACULTY OF EDUCATION OLD CAMPUS HYD. UNIVERSITY OF SINDH
- 2. PRESENTED BY: SHAKEELA M. ANWER (2k17/BEDSM/54) ASSIGNED BY: DR AMJAD ALI ARAIN TOPIC: COEFFICIENT OF VARIANCE
- 3. DEFINITION It is the ratio of the Standard Deviation to the mean It is also known as Relative Standard Deviation It is often expressed as percentage
- 4. FORMULAS
- 5. EXAMPLE 1
- 6. EXAMPLE 2
- 7. APPLICATIONS it can help demonstrate when distributions are considered low-variance and when they are considered high-variance. In investment and finance, the COV can be used to evaluate risk of BONDS and STOCKS This is useful when comparing measurements across multiple heterogenous data sets
- 8. LIMITATIONS It can not be used on any data less than ration level. It is sensitive to arithmetic mean that are close to zero and should not be used if this is the case. It is sensitive to small changes to the mean and thus to small sample sizes. Comparing COV between parameters using relative units can result in differences that may not be real.
- 9. THANK YOU!