How to Calculate Sample Variance with VAR.S

Use VAR.S to measure the risk in a sample of returns — and see how mixing two investments lowers variance.

You will learn to

• Calculate a sample variance with VAR.S
• Convert variance back to a standard deviation
• Find the variance of a 50/50 mix of two series

How it works

Variance is the average squared distance of values from their mean. =VAR.S(B2:B9) treats the data as a sample and divides by n − 1. Because the distances are squared, variance is in squared units (%² for returns), which is why people usually take its square root — the standard deviation — when they report it.

Variance is still the workhorse inside statistics and finance: variances of independent things add up, and portfolio risk models are built on them. Use VAR.S for samples, VAR.P for complete populations.

=VAR.S(B2:B9)