Week 7: Variance and Standard Deviation

variance (σ2) in statistics is a measurement of the spread between numbers in a data set. That is, it measures how far each number in the set is from the mean and therefore from every other number in the set. In investing, the variance of the returns among assets in a portfolio is analyzed as a means of achieving the best asset allocation. The variance equation, in financial terms, is a formula for comparing the performance of the elements of a portfolio against each other and against the mean.

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