What is the difference between a large and a small variance?

If the value of the variance is 0, it indicates that all the data points in the data set are of equal value. A large variance implies that the data is more vastly spread out from the mean. Similarly, a small variance shows that the values of the data points are closer together and are clustered around the mean.

What is the formula for variance?

The general formula for variance is given as, Var (X) = E [ ( X – μ) 2] When we take the square of the standard deviation we get the variance of the given data. Intuitively we can think of the variance as a numerical value that is used to evaluate the variability of data about the mean.

What is variance & why is it important?

Variance is a measurement of the spread between numbers in a data set. In particular, it measures the degree of dispersion of data around the sample's mean. Investors use variance to see how much risk an investment carries and whether it will be profitable.