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Variance |
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Definition of VarianceVarianceA measure of dispersion of a set of data points around their mean value. The mathematical VarianceThe weighted average of the squared deviations from the variancea difference between an actual and a standard or VarianceThe dispersion of a variable. The square of the standard deviation. varianceAverage value of squared deviations from mean. A measure of volatility.
Related Terms:CovarianceA statistical measure of the degree to which random variables move together. Mean-variance analysisEvaluation of risky prospects based on the expected value and variance of possible outcomes. Mean-variance criterionThe selection of portfolios based on the means and variances of their returns. The Mean-variance efficient portfolioRelated: Markowitz efficient portfolio Minimum-variance frontierGraph of the lowest possible portfolio variance that is attainable for a given Minimum-variance portfolioThe portfolio of risky assets with lowest variance. Portfolio varianceWeighted sum of the covariance and variances of the assets in a portfolio. Serial covarianceThe covariance between a variable and the lagged value of the variable; the same as Variance minimization approach to trackingAn approach to bond indexing that uses historical data to Variance ruleSpecifies the permitted minimum or maximum quantity of securities that can be delivered to Variance analysisA method of budgetary control that compares actual performance against plan, investigates the causes of the variance and takes corrective action to ensure that targets are achieved. budget variancethe difference between total actual overhead controllable variancethe budget variance of the two variance approach to analyzing overhead variances fixed overhead spending variancethe difference between the total actual fixed overhead and budgeted fixed overhead; fixed overhead volume variancesee volume variance labor efficiency variancethe number of hours actually worked minus the standard hours allowed for the production labor mix variance(actual mix X actual hours X standard rate) - (standard mix X actual hours X standard rate); labor rate variancethe actual rate (or actual weighted average rate) paid to labor for the period minus the standard rate multiplied by all hours actually worked during the period; labor yield variance(standard mix X actual hours X standard rate) - (standard mix X standard hours X standard rate); material price variancetotal actual cost of material purchased material quantity variance(actual quantity X standard price) - (standard quantity allowed standard price); material mix variance(actual mix X actual quantity X standard price) - (standard mix X actual quantity X standardprice); material yield variance(standard mix X actual quantity X standard price) - (standard mix X standard quantity X standard price); noncontrollable variancethe fixed overhead volume variance; overhead efficiency variancethe difference between total budgeted overhead at actual hours and total budgeted overhead spending variancethe difference between total actual overhead and total budgeted overhead at actual total overhead variancethe difference between total actual overhead and total applied overhead; it is the amount of underapplied or overapplied overhead total variancethe difference between total actual cost incurred variable overhead efficiency variancethe difference between budgeted variable overhead based on actual input activity and variable overhead applied to production variable overhead spending variancethe difference between total actual variable overhead and the budgeted amount of variable overhead based on actual input activity variance analysisthe process of categorizing the nature (favorable or unfavorable) of the differences between standard and actual costs and determining the reasons for those differences volume variancea fixed overhead variance that represents CovarianceA measure of the degree to which returns on two assets move in Direct materials mix varianceThe variance between the budgeted and actual mixes of Labor efficiency varianceThe difference between the amount of time that was budgeted Labor rate varianceThe difference between the actual and standard direct labor rates Materials price varianceThe difference between the actual and budgeted cost to Materials quantity varianceThe difference between the actual and budgeted quantities Production yield varianceThe difference between the actual and budgeted proportions Selling price varianceThe difference between the actual and budgeted selling price for Correlation coefficientA standardized statistical measure of the dependence of two random variables, Country betaCovariance of a national economy's rate of return and the rate of return the world economy Hedging demandsDemands for securities to hedge particular sources of consumption risk, beyond the usual Homogenous expectations assumptionAn assumption of Markowitz portfolio construction that investors Magic of diversificationThe effective reduction of risk (variance) of a portfolio, achieved without reduction Markowitz diversificationA strategy that seeks to combine assets a portfolio with returns that are less than Markowitz efficient portfolioAlso called a mean-variance efficient portfolio, a portfolio that has the highest Naive diversificationA strategy whereby an investor simply invests in a number of different assets and Standard deviationThe square root of the variance. A measure of dispersion of a set of data from their mean. Budgetary controlThe process of ensuring that actual financial results are in line with targets – see variance backflush costinga streamlined cost accounting method that speeds up, simplifies, and reduces accounting effort in an environment that minimizes inventory balances, requires Correlation coefficientA statistic in which the covariance is scaled to a Implied volatilityFor an option, the variance that makes a call option price Markowitz modelA model for selecting an optimum investment portfolio, Standard deviationA measure of the variation in a distribution, equal to the Variable costA cost that changes in amount in relation to changes in a related activity. standard deviationSquare root of variance. Another measure of volatility. Record accuracyThe variance between book and on-hand quantities, expressed
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