The coefficient of variation (CV) is a relative measure of variability that indicates the size of a standard deviation in relation to its mean. It is a standardized, unitless measure that ALLOWS you to compare variability between disparate groups and characteristics. It is also known as the relative standard deviation (RSD).

In this post, you will LEARN about the coefficient of variation, how to calculate it, know when it is PARTICULARLY useful, and when to avoid it.

How to Calculate the Coefficient of Variation

Calculating the coefficient of variation involves a simple ratio. SIMPLY take the standard deviation and divide it by the mean.

Equation for the coefficient of variation

Higher values indicate that the standard deviation is relatively large compared to the mean.

For example, a pizza restaurant measures its delivery time in minutes. The mean delivery time is 20 minutes and the standard deviation is 5 minutes.

Coefficient of variation equation for the pizza delivery example.

Interpreting the Coefficient of Variation

For the pizza delivery example, the coefficient of variation is 0.25. This value tells you the relative size of the standard deviation compared to the mean.  Analysts often report the coefficient of variation as a percentage. In this example, the standard deviation is 25% the size of the mean.

If the value equals one or 100%, the standard deviation equals the mean. Values less than one indicate that the standard deviation is smaller than the mean (typical), while values greater than one occur when the S.D. is greater than the mean.

In general, higher values represent a greater degree of relative variability.