ENTRY  N° 78  /  80
Glossary

Variance

Part of the theme Volatility and statistics.

Definition

Variance is the average of the squared differences of values from their mean, and standard deviation is its square root.

Variance, not standard deviation, is additive across independent periods, which is why volatility scales with the square root of time rather than time itself.

Formula / example: Standard deviation = square root of variance

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