How Do You Calculate Variance in Excel?

Variance is a statistical measure of variation. It measures dispersion in a set of data. This implies that the greater the variance the bigger the difference between individual numbers in a given set of numbers. Mathematically, variance is the average squared difference between each observation (each number) and the mean of the entire data set. It is the average squared deviation from the mean.

There are four steps involved in calculating variance: the mean, deviation, squared and average. The mean is generally the central value of a data set. The most commonly known mean is the arithmetic average, which is calculated by summing up all the numbers and then dividing the sum by the count of numbers used. For instance, the total of the numbers 10, 20, 30, 40, 50, is 10+20+30+40+50=150. Dividing this by the count of numbers (five) gives the arithmetic average, which is 30. Deviations from the mean are calculated by subtracting the mean from each number, which are then squared to get rid of any negative numbers. The final step is calculating variance as average of squared deviations.