Coefficient of Variation

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 one another. It is calculated as the ratio of the root mean squared error (RMSE) to the mean of the dependent variable. Coefficient of Variation could help investors select investments based on the risk/reward ratio and their profiles. It is particularly useful when, compare results from two different surveys or tests that have different measures or values.