Variability

Variability

The extent to which data points in a statistical distribution or data set diverge from the average or mean value. Variability also refers to the extent to which these data points differ from each other. There are four commonly used measures of variability: range, mean, variance and standard deviation.

The risk perception of an asset class is directly proportional to the variability of its returns. As a result, the risk premium that investors demand to invest in assets, such as stocks and commodities, is higher than the risk premium for assets such as Treasury bills, which have much lower return variability.

Variability is used to standardize the returns obtained on an investment. One measure of reward-to-variability is the Sharpe ratio, which measures the excess return or risk premium per unit of risk for an asset. All else being equal, the asset with the higher Sharpe ratio delivers more return for the same amount of risk.


Investment dictionary. . 2012.

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  • Variability — Va ri*a*bil i*ty, n. [Cf. F. variabilit[ e].] [1913 Webster] 1. The quality or state of being variable; variableness. [1913 Webster] 2. (Biol.) The power possessed by living organisms, both animal and vegetable, of adapting themselves to… …   The Collaborative International Dictionary of English

  • variability — variability. = variation (см.). (Источник: «Англо русский толковый словарь генетических терминов». Арефьев В.А., Лисовенко Л.А., Москва: Изд во ВНИРО, 1995 г.) …   Молекулярная биология и генетика. Толковый словарь.

  • variability — variability. См. изменчивость. (Источник: «Англо русский толковый словарь генетических терминов». Арефьев В.А., Лисовенко Л.А., Москва: Изд во ВНИРО, 1995 г.) …   Молекулярная биология и генетика. Толковый словарь.

  • variability — index deviation, diversity, irregularity Burton s Legal Thesaurus. William C. Burton. 2006 …   Law dictionary

  • variability — noun ADJECTIVE ▪ considerable, extreme, great, high, wide ▪ There is considerable variability in all the test scores. ▪ low ▪ …   Collocations dictionary

  • Variability — The term , the state or characteristic of being variable , may be applied to many different subjects:*Solar van *Human variability *Genetic variability *Heart rate variability *Spatial variability *Statistical variability *Climate variability …   Wikipedia

  • variability — UK [ˌveərɪəˈbɪlɪtɪ] / US [ˌverɪəˈbɪlɪtɪ] noun [uncountable] the fact that something changes often or is not always the same There is considerable variability in quality …   English dictionary

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