Variability

Very. Ability. Variability is the measure of how spread out the data points in a data set are either from each other or from the mean or both. Sometimes, called the spread, there are a number of ways we can measure it: variance, standard deviation, range, interquartile range (IQR). We typically don’t use the range which is simply the difference between the highest and lowest data points because the range ignores all the other data points except the highest and lowest.

It’s often important to know not just where the middle (usually the mean) of the data set is but also how close together or spread out the data points are from each other. The farther the data points are from one another, the greater the variability in the data. In terms of investing, stocks with a high variability in their returns are considered riskier investments than those that have less variable returns.