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Statistics

Numerical Methods for


Describing Quantitative Data

Yrd.Do.Dr. Esin FRUZAN


Learning Objectives

1. Explain Numerical Data Properties


2. Describe Summary Measures
Central Tendency
Variation

Shape

3. Analyze Numerical Data Using


Summary Measures
Numerical Data
Properties & Measures

Numerical Data
Properties

Central
Variation Shape
Tendency
Mean Range Skew
Median Interquartile Kurtosis
Range
Mode Variance
Midrange Standard Deviation
Midhinge Coeff. of Variation
Range

1. Measure of Dispersion
2. Difference Between Largest & Smallest
Observations
Range = X l arg est X smallest

3. Ignores How Data Are Distributed

7 8 9 10 7 8 9 10
Interquartile Range

1. Measure of Dispersion
2. Also Called Midspread
3. Difference Between Third & First
Quartiles
Interquartile Range = Q3 Q1
4. Spread in Middle 50%
5. Not Affected by Extreme Values
Variance &
Standard Deviation

1. Measures of Dispersion
2. Most Common Measures
3. Consider How Data Are Distributed
4. Show Variation About Mean (X or X)
X = 8.3

4 6 8 10 12
Sample Variance Formula

c h 2
Xi X n - 1 in denominator!
(Use N if Population
S2 = i =1
Variance)
n 1

=
c X 1 X h + cX
2
2 X h 2
c
+ L + Xn X h 2

n 1
Sample Standard
Deviation Formula
2
S= S

cXi X h
2

i =1
=
n 1

=
cX 1 X h + cX
2
2 X h 2
c
+ L + Xn X h 2

n 1
Variance Example

Raw Data: 10.3 4.9 8.9 11.7 6.3 7.7


n n

cXi X h
2

2
Xi
i =1 i =1
S = where X = = 8.3
n 1 n

S 2
=
a10.3 8.3 f + a4.9 8.3 f
2 2
a
+ L + 7.7 8.3 f 2

6 1
= 6.368
Coefficient of Variation

1. Measure of Relative Dispersion


2. Always a %
3. Shows Variation Relative to Mean
4. Used to Compare 2 or More Groups
5. Formula (Sample)
F SI
CV = G J 100%
HXK
Coefficient of Variation
Example

Group 1 Data: 1 2 3
Group 2 Data: 100 200 300
F SI 1
Group 1 CV = G J 100% = 100% = 50%
HXK 2

F SI
Group 2 CV = G J 100% =
100
100% = 50%
HXK 200
Thinking Challenge

Youre a financial analyst


for Prudential-Bache
Securities. You have
collected the following
closing stock prices of
new stock issues: 17, 16,
21, 18, 13, 16, 12, 11.
Describe the volatility of
the stock prices.
Variation Solution*

Range & Interquartile Range


Raw Data: 17 16 21 18 13 16 12 11
Ordered: 11 12 13 16 16 17 18 21
Position: 1 2 3 4 5 6 7 8

Range = X l arg est X smallest = 21 11 = 10

Interquartile Range = Q3 Q1 = 18.0 12.5 = 5.5


Variation Solution*

Sample Variance
Raw Data: 17 16 21 18 13 16 12 11
n n

cXi X h
2
Xi
S2 = i =1
where X = i =1
= 15.5
n 1 n

S 2
=
a17 15.5 f + a16 15.5 f
2 2
a
+ L + 11 15.5 f 2

8 1
= 1114
.
Variation Solution*

Sample Standard Deviation


n

cXi X h
2

S = S2 = i =1
= 1114
. = 3.34
n 1
Coefficient of Variation
F SI F
CV = G J 100% = G
3.34 I
J 100% = 215%
.
HXK H 15.5 K
Summary of
Variation Measures
Measure Equation Description
Range Xlargest - Xsmallest Total Spread
Interquartile Range Q3 - Q1 Spread of Middle 50%

(X i
2 Dispersion about
Standard Deviation X)
(Sample) Sample Mean
n 1
Dispersion about
(X i
2
Standard Deviation X )
(Population) Population Mean
N
Variance (Xi -X )2 Squared Dispersion
(Sample) n-1 about Sample Mean
Coeff. of Variation (S /X )100% Relative Variation
Summary of
Variation Measures
Measure Equation Description
Range Xlargest - Xsmallest Total Spread
Interquartile Range Q3 - Q1 Spread of Middle 50%

(X
2 Dispersion about
Standard Deviation X)
(Sample)
i
Sample Mean
n 1

(X i
2 Dispersion about
Standard Deviation )
(Population) Population Mean
N
Variance (Xi - X)2 Squared Dispersion
(Sample) n-1 about Sample Mean
Coeff. of Variation (S / X)100% Relative Variation
Numerical Data
Properties & Measures

Numerical Data
Properties

Central
Variation Shape
Tendency
Mean Range Skew
Median Interquartile Kurtosis
Range
Mode Variance
Midrange Standard Deviation
Midhinge Coeff. of Variation
Shape

1. Describes How Data Are Distributed


2. Measures of Shape
Kurtosis = How Peaked or Flat
Skew = Symmetry

Left-Skewed Symmetric Right-Skewed


Mean Median Mode Mean = Median = Mode Mode Median Mean
Box-and-Whisker Plot

1. Graphical Display of Data Using


5-Number Summary

Xsmallest Q1 Median Q3 Xlargest

4 6 8 10 12
Shape &
Box-and-Whisker Plot

Left-Skewed Symmetric Right-Skewed


Q1 Median Q3 Q1 Median Q3 Q1 Median Q3
Conclusion

1. Explained Numerical Data Properties


2. Described Summary Measures
Central Tendency
Variation

Shape

3. Analyzed Numerical Data Using


Summary Measures