Coefficient of variation

Coefficient of variation
• The coefficient of variation (CV) is defined as
the ratio of the standard deviation to the
mean :
 Coefficient of variation

• Coefficient of Variation is the percentage variation in

mean,

• standard deviation being considered as the total

variation in the mean.

• If we wish to compare the variability of two or more

series, we can use the coefficient of variation.
• .
 Coefficient of variation
• The series of data for which the coefficient of
variation is large indicates that the group is
more variable and
• it is less stable or less uniform.
• If a coefficient of variation is small it indicates
that the group is
– less variable and
– it is more stable or more uniform
 Coefficient of variation
• The coefficient of variation (CV) refers to a
statistical measure of the distribution of data
points in a data series around the mean.
• It represents the ratio of the standard deviation
to the mean.
• The coefficient of variation is a helpful statistic
in comparing the degree of variation from one
data series to the other, although the means
are considerably different from each other.
 Coefficient of variation
Distributions with a coefficient of variation to be
less than 1 are considered to be low-variance,

whereas those with a CV higher than 1 are

considered to be high variance.  
 Standard deviation

Column A Column B Column C

X value X value-Xbar (X-Xbar)2
90 90 - 87.7 = 2.30 (2.30)2 = 5.29
91 91 - 87.7 = 3.30 (3.30)2 = 10.89
89 89 - 87.7 = 1.30 (1.30)2 = 1.69
84 84 - 87.7 = -3.70 (-3.70)2 = 13.69
88 88 - 87.7 = 0.30 (0.30)2 = 0.09
93 93 - 87.7 = 5.30 (5.30)2 = 28.09
80 80 - 87.7 = -7.70 (-7.70)2 = 59.29
90 90 - 87.7 = 2.30 (2.30)2 = 5.29
85 85 - 87.7 = -2.70 (-2.70)2 = 7.29
87 87 - 87.7 = -0.70 (-0.70)2 = 0.49
X = 877 (X-Xbar) = 0 (X-X bar)² = 132.10
 Standard deviation
Formula
 Standard deviation
• Mean =87.7
• n-1= 10-1=9
• (X-X bar)² = 132.10
• SD= score root of 132.1/9
• calculate standard deviation using the above
data
 Degree of freedom
• The "n-1" term in the above expression represents the
degrees of freedom (df).
• "degrees of freedom" indicates how much freedom or
independence there is within a group of numbers.
For example,
• if you were to sum four numbers to get a total, you have the
freedom to select any numbers you like.
• However, if the sum of the four numbers is stipulated to be
92, the choice of the first three numbers is fairly free (as long
as they are low numbers), but the last choice is restricted by
the condition that the sum must equal 92.
 Degree of freedom
For example,
• if the first three numbers chosen at random are 28, 18, and 36,
these numbers add up to 82, which is 10 short of the goal.
• For the last number there is no freedom of choice. The number
10 must be selected to make the sum come out to 92.
• Therefore, the degrees of freedom have been limited by 1 and
only n-1 degrees of freedom remain.
• In the SD formula, the degrees of freedom are n minus 1
because the mean of the data has already been calculated
(which imposes one condition or restriction on the data set).
 Coefficient of variation
Formula for Coefficient of Variance
Coefficient of Variation
Cv = Standard Deviation / Mean

In other words coefficient of variation is defined ratio of the Standard Deviation to the Mean.

Coefficient of Variance

Example
1. Find CV of {13,35,56,35,77}

Solution:
Number of terms (N) = 5
Mean:
Xbar = (13+35+56+35+77)/5 = 216/5 = 43.2
Standard Deviation (SD):
Formula to find SD is
 Coefficient of variation
• sd=√(x1-xm)2+(x2-xm)2+..+(xn-xm)2)
N-1

=√(13-43.2)2+(35-43.2)2+(56-43.2)2+(35-43.2)2+(77-43.2)2)
5-1

=√(-30.2)2+(-8.2)2+(12.9)2+(-8.2)2+(33.8)2)
4

=√(912.04)+(67.24)+(163.84)+(67.24)+(1142.44)
4
=√(588.2)

sd=24.2528

Coefficient of variation (CV):

CV = Standard Deviation / Mean
= 24.2528/43.2
= 0.5614
Hence the required Coefficient of Variation is 0.5614
 Coefficient of variation
A company has two sections with 40 and 65
employees respectively.
Their average weekly wages/salary are $450 and
$350. The standard deviation are 7 and 9.
• (i) Which section has a larger wage bill?.
• (ii)Which section has larger variability in
wages?
 Coefficient of variation
A company has two sections with 40 and 65 employees respectively.
Their average weekly wages are $450 and $350. The standard
deviation are 7 and 9. (i) Which section has a larger wage bill?. (ii)
Which section has larger variability in wages?

Solution:

(i) Wage bill for section A = 40 x 450 = 18000

Wage bill for section B = 65 x 350 = 22750
Section B is larger in wage bill.
(ii) Coefficient of variance for Section A = 7/450 x 100 =1.56 %
Coefficient of variance for Section B = 9/350 x 100 = 2.57%
Section A is more consistent so there is greater variability in the wages of
section B.
 Coefficient of variation
Exercise
1. Calculate the coefficient of variance of the marks
secured by a student in the exam as given : 82, 95,
75, 78, 87
2. The standard deviation and the mean of 16 values
are 15.6 and 20.5. Find the coefficient of variation
3. A group of 80 candidates have their average height
is 145.8 cm with coefficient of variance 2.5%. What
is the standard deviation of their height?