What variance tells you
Variance is the average of the squared distances of each value from the mean. Because the distances are squared, larger deviations count much more, so variance is very sensitive to outliers. Its square root — the standard deviation — brings the spread back into the same units as your original data, which is usually easier to interpret.
Sample vs population
- Sample variance divides by n−1 and estimates the spread of a larger group from a subset — Excel's
VAR.S. - Population variance divides by n and is used only when your data covers the entire group — Excel's
VAR.P.
Frequently asked questions
Why is variance in squared units?
Because each deviation from the mean is squared before averaging. That's why analysts often report the standard deviation instead — it's the square root, back in the original units.
Why does sample variance need at least two values?
It divides by n−1, which is zero for a single value, making sample variance undefined. Population variance of one value is 0.
Does it handle decimals and negatives?
Yes. Mix whole numbers, decimals and negatives freely; non-numeric entries are ignored.