coefficient of variation: Definition and Much More from Answers.com
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coefficient of variation
(¦kō·ə′fish·ənt əv ′ver·ē′ā·shən)
(statistics) The ratio of the standard deviation of a distribution to its arithmetic mean.
Investment Dictionary: Coefficient Of Variation - CV
A statistical measure of the dispersion of data points in a data series around the mean. It is calculated as follows:
The coefficient of variation represents the ratio of the standard deviation to the mean, and it is a useful statistic for comparing the degree of variation from one data series to another, even if the means are drastically different from each other.
Investopedia Says:
In the investing world, the coefficient of variation allows you to determine how much volatility (risk) you are assuming in comparison to the amount of return you can expect from your investment. In simple language, the lower the ratio of standard deviation to mean return, the better your risk-return tradeoff.
Note that if the expected return in the denominator of the calculation is negative or zero, the ratio will not make sense.
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Accounting Dictionary: Coefficient of Variation
Measure of relative dispersion, or relative risk. It is computed by dividing the standard deviation (s) by the expected value (x-). For example, consider two investment proposals, A and B, with the following data:
Therefore, because the coefficient is a relative measure of risk, B is considered more risky than A.
Geography Dictionary: coefficient of variation
V
The standard deviation of a data set expressed as a percentage of the arithmetic mean, this is a measurement of the amount of variation in a data set. The lower the value of V, the more the overall data approximate to the mean. It is used in comparing two apparently similar data sets.
Architecture: coefficient of variation
The standard deviation expressed as a percentage of the average.
Wikipedia: coefficient of variation
In probability theory and statistics, the
coefficient of variation (CV) is a measure of dispersion of a
probability distribution. It is defined as the ratio of the standard deviation 
to the mean
:
The coefficient of variation is a dimensionless number. For distributions of positive-valued random variables, it allows comparison of the variation of populations that have significantly different mean values. It is often reported as a percentage (%) by multiplying the above calculation by 100.
When the mean value is near zero, the coefficient of variation is sensitive to change in the standard deviation, limiting its usefulness.
The coefficient of variation is also common in applied probability fields such as renewal theory, queueing theory, and reliability theory. In these fields, the exponential distribution is often more important than the normal distribution. The standard deviation of an exponential distribution is equal to its mean, so its coefficient of variation is equal to 1. Distributions with CV < 1 (such as an Erlang distribution) are considered low-variance, while those with CV > 1 (such as a hyper-exponential distribution) are considered high-variance. Some formulas in these fields are expressed using the squared coefficient of variation, often abbreviated SCV.
The absolute value of the coefficient of variation expressed as a percentage is often referred to as the relative standard deviation (RSD or %RSD).
See also
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