CFA CFA Level 1 Variance vs Variation

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Variance vs Variation

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    • Avatar of gontatagontata
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        Isn’t variance a measure of variation?

      • Avatar of Zee TanZee Tan
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          Variance is a specific, defined term: measure of distribution spread, i.e. how varied a distribution is. This is calculated by measuring the deviation (difference) of each data point from the mean, squaring it, and calculating its average:

          population variance = σ2=(Xiμ)N

          Variation‘ is not a specific, defined term, but rather just saying that ‘its datapoints are distributed’.

          Variance is in a way a measure of ‘variation’ so a lecturer could end up using this interchangeably when explaining concepts, but it’s unlikely you’ll find a question asking you to calculate the ‘variation’ of a distribution.

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