Arithmetic average has strengths and weaknesses Arithmetic average is the most popular measure of central tendency and (the reason for its popularity is that) it is the easiest one to calculate. However, like every other statistical measure, arithmetic average has strengths and weaknesses and it is more suitable in some situations than in others. The … Read more
Median definition Like arithmetic average, geometric average, or mode, median is one of the measures of central tendency of a population, a sample, or a probability distribution. Median is the value which divides a data set in two halves – one with values lower than the median and the other with the higher values. Median … Read more
Arithmetic average: the basic measure of central tendency Arithmetic average, of arithmetic mean, or just mean, is probably the simplest tool in statistics, designed to measure central tendency in a data set (which can be a group of stocks or returns of a stock in particular years). Using arithmetic average has advantages and disadvantages, and … Read more
Arithmetic average: the basic tool in statistics Arithmetic average is a good tool for measuring central tendency of data sets which represent independent values and values taken at one point of time, for example when you’re calculating average return of a number of stocks in a given time period (see arithmetic average calculation example). Calculating … Read more
This is a very basic article explaining why unweighted arithmetic average is not suitable when portfolio is not equally weighted. See other and more advanced articles about central tendency. 3 stock portfolio example Let’s say you have 1 million dollars and you want to invest it in stocks. You construct a fairly concentrated portfolio – … Read more
Arithmetic average basics Arithmetic average, or arithmetic mean, or just mean, is the very basic statistical measure. It provides quick and easy information about general level of values in a data set – it is one of the measures of central tendency. Why to calculate and use mean When you have a set of data, … Read more
What volatility means Volatility is a measure of how much something tends to change. Unlike the usual way people look at prices of securities and their changes – up or down, the volatility point of view does not care about the direction so much. In fact it does not distinguish between up and down. When … Read more
Variance and standard deviation definition and calculation Variance and standard deviation are widely used measures of dispersion of data or, in finance and investing, measures of volatility of asset prices. Variance is defined and calculated as the average squared deviation from the mean. Standard deviation is calculated as the square root of variance or in … Read more
This article is a step-by-step guide to calculating variance and standard deviation. Definition of variance Variance is a measure of dispersion in a set of data. It measures how big the differences are between individual numbers in a set of numbers. Mathematically it is the average squared difference between each occurrence (each number) and the … Read more
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