What Sample variance is
Sample variance is a measure of the spread of a set of data points around the mean. It is calculated by taking the sum of the squared differences between each data point and the mean, and then dividing that sum by one less than the number of data points.
Steps for Sample Variance:
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Calculate the mean of the data set.
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Subtract the mean from each data point.
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Square the differences between the mean and each data point.
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Sum all of the squared differences.
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Divide the sum of the squared differences by one less than the number of data points.
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The result is the sample variance.
Examples
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A market research company is interested in estimating the spending habits of its target demographic. The company is able to collect data from a sample of 500 people within the demographic and uses sample variance to determine how much variance there is in the spending habits between the sample group and the entire demographic.
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A manufacturing company is interested in understanding the quality of its products. The company collects data from a sample of 200 products and uses sample variance to determine the variance between the sample group and the entire product line.