The coefficient of variation (CV) is a measure of relative variability equal to the standard deviation divided by the mean, and formatted to %. It is regularly used to compare risk (volatility) in investing, and is especially useful in to compare data sets with different units of measure, or to assess data without prior data to compare. Consider weights of 10 oz, 13.4 oz, 15.1 oz with SD of 2.597 oz. The corresponding weights in pounds 0.625 lb, 0.838 lb, 0.944 lb have SD 0.162 lb. The SDs are not equal, yet the sample and its variability are the same. How can we compare variabilities? The CV, unlike other measures of variability, does not depend on the units of measure. The units of the standard deviation are divided out by the units of the mean. For a "rule of thumb", a CV of greater than 5% is considered significant.

Show what you have learned about the Coefficient of Variation (CV) from the text above by answering what are two situations where the CV is especially useful?