What is the Coefficient of Variation and Why Should You Care?
The Coefficient of Variation (CV) is a normalized measure of the dispersion of a probability distribution.
Formula
$$\text{CV} = \left(\frac{\text{Standard Deviation}}{\text{Mean}}\right) \times 100$$
The result is expressed as a percentage.
Where:
- Standard Deviation is the measure of the spread of data points
- Mean is the average value of the data set
Calculation Example
Data set: [85, 90, 78, 92, 88]
- Mean = 86.6
- Standard Deviation = 5.46
$$\text{CV} = \left(\frac{5.46}{86.6}\right) \times 100 \approx 6.30$$
The Coefficient of Variation is approximately 6.30%.