How to Calculate Variance in Excel

In the world of data analysis, understanding the spread of your numbers is just as important as knowing their average. Whether you are a financial analyst tracking stock volatility, a quality control engineer monitoring product consistency, or a student tackling statistics, Variance is a key metric you need to master.

While Excel is a powerhouse for statistical analysis, knowing exactly how to calculate variance in Excel can be tricky due to the different formulas available. Do you use VAR.P or VAR.S? What about the coefficient of variance?

In this comprehensive guide, we will break down everything you need to know about calculating variance in Excel, explain the theory behind it, and introduce you to a free online tool that does it all for you instantly.

What is Variance?

Before we dive into Excel formulas, let's clarify what variance actually represents. In simple terms, variance measures how far a set of numbers is spread out from their average (mean).

• Low Variance Data points are clustered closely around the mean. Ideally, in manufacturing, you want low variance to ensure consistency.


• High Variance Data points are spread far apart from the mean. In finance, high variance often implies higher risk or volatility.

Population vs. Sample Variance

This is the most common stumbling block. Excel has different functions for Population Variance and Sample Variance. Choosing the wrong one will give you an incorrect result.

How to Calculate Variance in Excel

Let's get practical. Here is the step-by-step process to calculate variance in Excel for a dataset.

Step 1: Prepare Your Data

Enter your data points into a single column. For this example, let's assume your data is in cells A2 through A11.

Step 2: Choose Your Formula

Decide if you need Population Variance or Sample Variance based on the table above.

Step 3: Enter the Function

Click on an empty cell where you want the result to appear.

• For Population Variance, type: =VAR.P(A2:A11)
• For Sample Variance, type: =VAR.S(A2:A11)

Step 4: Press Enter

Excel will instantly calculate the variance value.

How to Calculate Coefficient of Variance in Excel

The Coefficient of Variation (CV) is a standardized measure of dispersion. It's useful for comparing the degree of variation from one data series to another, even if the means are drastically different.

Excel doesn't have a direct function for this, but it's easy to calculate manually:

Formula in Excel:
=STDEV.S(A2:A11) / AVERAGE(A2:A11)

The Faster Way: Use an Online Calculator

While Excel is powerful, it requires you to open software, input data correctly, and remember the specific formulas. If you just need a quick answer—or if you want to see the step-by-step calculation to understand the math—an online tool is superior.

Common Questions

How to calculate the variance in Excel for older versions?

Older versions of Excel (2007 and earlier) used =VAR() for sample variance and =VARP() for population variance. These are still supported for compatibility but it's recommended to use the newer .S and .P versions.

Why is my variance so high?

A high variance indicates that your data points are spread out over a wide range of values. This could be due to outliers or simply the nature of the data you are measuring.

Can I calculate variance for text data?

No, variance is a numerical statistical measure. It cannot be calculated for categorical data (like names or colors) unless you assign numerical values to them.

Mastering how to calculate variance in Excel is a valuable skill that enhances your data analysis capabilities. However, for quick checks and learning purposes, don't hesitate to use our dedicated Variance Calculator.