Variance Equation
The term variance refers to a statistical measurement of the spread between numbers in a data set. More specifically, variance measures how far each number in the set is from the mean (average), and thus from every other number in the set. Variance is often depicted by this symbol: σ. It is used by both analysts and traders to determine volatility and market security.The square root of the variance is the standard deviation (SD or σ), which helps determine the consistency of an investment’s returns over a period of time.