Measures Of Spread And Dispersion

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Measures of spread and dispersion
Measures of central tendency are not the only statistics used to summarise a distribution . We also have to identify the spread of the distribution of the data set. Spread defines how widely the observations are spread out around the measure of central tendency. Note that the words, spread, dispersion and variation denote the same meaning. The most commonly used measures of spread are range, variance and standard deviation. The scales of measurement appropriate for the use of variance and standard deviation are ratio and interval scales.
Measures of spread increase on greater variation on the variable. Measures of spread equal zero when there is no variation. Maximum spread for numeric and ordinal variables …show more content…

Chebyshev theorem applies to all kinds of distribution regardless of their shape. It can be used in scenarios where the shape of the distribution is not known or not normal.
Chebyshev Theorem states at least 1-(1/k2) values will fall within (+/- )k standard deviations of the mean regardless of the shape of the distribution.

Within k standard deviations of the mean μ (+/- )kσ lie at-least 1-(1/k2) Proportion of values.
Assumption : k>1

Coefficient of variation

The Coefficient of variation is a statistic that is the ratio of the standard deviation to the mean expressed in percentage and denoted by CV.

CV = (σ / μ ) * 100

The coefficient of variation is essentially a comparison of standard deviation to its mean. The coefficient of variation can be useful in computing standard deviation that have been computed from data with different means.
For example, Five weeks of average prices of a stock of Apple Inc. is 103.6, 107, 110, 92, 111 . To compute the coefficient of variation for these stock prices, first determine the mean and standard deviation . (σ = 7.67 μ = 104.72)
CV = (σ / μ ) * 100
CV = (7.67/104.72) * 100 = 7.32 %
The standard deviation is 7.32 % of the

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