# How to Calculate Variance in Excel (With Step-by-Step Instructions)

August 3, 2023 893 views

The variance function is significantly important for a variety of analytical purposes, making it an important tool in Excel. In this article, we shed light on the multitude of reasons why the variance function is crucial in data analysis. We emphasize the convenience and efficiency of having this built-in function readily available within WPS Spreadsheet, empowering users to perform comprehensive data analysis effortlessly. With the variance function at your disposal, you can unlock valuable insights and enhance your decision-making processes.

## What are the Functions Used to Calculate the Variance?

• VAR.S: Estimated Variance is calculated using VAR.S. This method estimates the variance using the "n-1" method, where "n" is the number of data points in the sample.

• VARA: Similar to VAR.S, this term represent estimated variance of a sample data, however, in this approach of estimating variance both numbers and text in the dataset are used, treating text as 0 in the calculation of variance.

• VAR.P: VAR.P is used when the variance of a population dataset as a whole must be estimated. It employed the same "n-1" approach as before, but "n" in VAR.P is the population's total number of data points.

• VARPA: VARPA, like VAR.P, computes the variance of a population dataset as a whole. VARPA considers both numbers and text in the dataset, considering text as 0.

Argument

VAR, VAR.S, VARP, VAR.P

VARA & VARPA

Logical values within arrays and references

Not considered

Evaluated

(TRUE=1, FALSE=0)

Text representations of numbers within arrays and references

Not considered

Treated as zero

Logical values and text representations of numbers entered directly into arguments.

Considered

(TRUE=1, FALSE=0)

Empty cells

Not Considered

## What are the Types of Variance?

• Population Variance: When the data reflects an entire population, the term population variation is used. It is a measure of how widely distributed a set of data points is.

• Sample Variance: When the data represents a sample from a broader population, sample variance is used. It is a metric for determining how evenly dispersed the numbers in a list are.

• Variance of Logical and Text Inputs: When computing variance, logical values (TRUE/FALSE) are considered differently from text inputs. In most cases, logical values are translated to numerical values (TRUE=1, FALSE=0) and included in the variance calculation. In contrast, text inputs are evaluated as zero in the variance computation. This indicates that the text values have no bearing on the variance computation.

Variance Type

Data Type

Purpose

Population Variance

Numeric

Measures the dispersion of a population

Sample Variance

Numeric

Estimates the dispersion of a population based on a sample

Variance of Logical and Text Inputs

Logical

Calculates variance of logical values (TRUE=1, FALSE=0)

## How to Calculate Variance in Excel? ( Step-By-Step )

Now that we know that Variance measures how far each data point in a set is from the mean, providing insights into the spread of the data. Let’s delve into how to use the actual variance formula in Excel using built-in functions. Remember, how to calculate sample variance of a small data set, or we can also refer to it as a sample, we use VARA or VAR.S. Since VARA and VAR.S can be used interchangeably we will be using VAR.S, since it is a newer version.

On How to use budget variance formula in Excel of larger data set, we will make use of VAR.P as it is the newer version and is recommended over VARPA.

Let’s consider our data, Profit of Xfactor every on each order, we will be calculating the VAR.S and VAR.P respectively.

Step 1: Open the data set in Excel.

Step 2: To calculate VAR.S, select an empty cell and enter “=VAR.S()“

Step 3: We will be using our sample data set as our range to calculate VAR.S.

Step 4: Hit enter to execute the formula. Variance of Profits from cell 2 till 12 will be calculated.

Next, we will be using our Population data set to calculate VAR.P, as this formula is to calculate variance of larger data sets.

Step 5: Enter the formula for VAR.P- “=VAR.P()“

Step 6: Select the entire Profit column to calculate variance and hit enter for results.

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### How to Calculate Variance in WPS Excel?

To calculate variance in WPS Spreadsheet, users can follow these simple steps:

Step 1: Open dataset in WPS Spreadsheet

Step 2: Place your cursor on any empty cell to begin the calculations

Step 3: To calculate sample variance, enter the following formula:

=VAR.S()

Step 4: Select the data range to calculate Variance.

Step 5: Sample variance will be displayed on the cell.

Step 6: To calculate Population Variance, simply enter the following formula:

=VAR.P()

Step 7: Select Population data range and hit enter.

Step 8: Population variance will be displayed on the cell.

## FAQS:

### 1. How is variance different from standard deviation?

The standard deviation of a set of numbers is the distance between them and the mean. On how to use the actual variance formula in Excel we calculate how far each point deviates from the mean on average. Variance is the average of all data points within a group, whereas standard deviation is the square root of the variance. Standard deviation is often preferred as it is expressed in the same units as the original data.

### 2. Can Excel handle large datasets for variance calculation?

Yes, Excel can handle large datasets when calculating variance. However, make sure your data is properly organized and that you're using the right formulas and functions.

## Mastering Variance Calculation in Excel

In this informative article, we delve into the concept of variance and its significance in Excel. We leave no stone unturned as we explore all the essential aspects of variance calculation within Excel. By examining the various functions available, we provide you with a clear understanding of how to effortlessly implement variance calculations in your projects.

Through a step-by-step guide, we empower you to put the powerful VAR functions into practice, enabling you to leverage their capabilities effectively. We also explored the variance function in WPS Spreadsheet, the best cost effective alternative to Excel. With its similarities to Excel interface, WPS Spreadsheet provides users to efficiently calculate variance of data. In search of a free office suite with advanced functions and tools? Download WPS Office and put an end to your search!

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