What does the coefficient of variation express?

The coefficient of variation is a statistical measure that expresses the standard deviation as a percentage of the mean. This metric allows for a comparison of the relative variability of different datasets, even when the means are different. It is particularly useful in assessing the risk associated with investments or other phenomena, as it provides insight into the degree of variation relative to the average value.

Using the coefficient of variation enables analysts and decision-makers to understand how much variability there is in relation to the average, facilitating comparisons across different variables or datasets. A higher coefficient indicates greater relative variability, while a lower coefficient suggests that the data points tend to be closer to the mean. This context helps in interpreting statistical data across various fields such as finance, research, and quality control.