How variance has no units but standard deviation has?
Answers
Answer:
Variance The variance is the average of the squared differences from the mean....Standard deviation is the square root of the variance so that the standard deviation would be about 3.03 However because of this squaring the variance is no longer in the same unit of measurement as the original data..
Standard deviation and variance are basic mathematical concepts that play important roles throughout the financial sector, including the areas of accounting, economics, and investing. In the latter, for example, a firm grasp of the calculation and interpretation of these two measurements is crucial to the creation of an effective trading strategy.
standard deviation and variance are both determined by using the mean of a group of numbers in question. The mean is the average of a group of numbers, and the variance measures the average degree to which each number is different from the mean. The extent of the variance correlates to the size of the overall range of numbers—meaning the variance is greater when there is a wider range of numbers in the group, and the variance is less when there is a narrower range of numbers.
KEY TAKEAWAYS
Standard deviation looks at how spread out a group of numbers is from the mean, by looking at the square root of the variance.
The variance measures the average degree to which each point differs from the mean—the average of all data points.
The two concepts are useful and significant for traders, who use them to measure market volatility.
Standard Deviation
Standard deviation is a statistic that looks at how far from the mean a group of numbers is, by using the square root of the variance. The calculation of variance uses squares because it weighs outliers more heavily than data closer to the mean. This calculation also prevents differences above the mean from canceling out those below, which would result in a variance of zero.