## What is the coefficient of variation?

In the context of crypto, the coefficient of variation can be used to compare the volatility of different crypto currencies. Volatility refers to how the price of a crypto tends to fluctuate over time. A crypto with high volatility will have large price fluctuations, while a crypto with low volatility will have smaller price fluctuations.

To calculate a crypto currency’s coefficient of variation, you will need to gather data on the crypto currency’s price over a period of time, such as daily or hourly prices. Then, you can use the coefficient of variation formula to compare the volatility of different crypto-currencies.

For example, let’s say you want to compare the volatility of Bitcoin and Ethereum. You could gather data on the daily price of each crypto-currency for a year, then use the coefficient of variation formula to compare their volatility. If Bitcoin’s coefficient of variation is higher than Ethereum’s, it means that Bitcoin is more volatile than Ethereum.

It is important to note that the coefficient of variation is only one way to measure volatility, and other methods can also be used.

## How to calculate the coefficient of variation of a crypto-currency?

To calculate the coefficient of variation of a crypto-currency, you will need to take the following steps:

Gather data on the price of the crypto-currency over a period of time. This can be daily or hourly prices, or any other time interval of your choice.

### Calculate the average of the data set

Calculate the average of the data set by adding up all the prices and dividing by the number of prices.

To calculate the average of a data set, you add up all the values in the data set, then divide by the number of values. The average is also known as the mean.

For example, let’s say you have a data set with the following values: 2, 4, 6, 8, 10. To calculate the average of this data set, you would do the following:

**Add all the values:** 2 + 4 + 6 + 8 + 10 = 30

**Divide the result by the number of values**: 30 / 5 = 6

The average of the data set is 6.

In the context of crypto-currencies, you might be interested in calculating the average price of a crypto-currency over a period of time, such as daily or hourly prices. To do this, you need to collect data on the prices of the crypto-currency over the desired time period, and then follow the steps above to calculate the average.

For example, let’s say you have data on the daily prices of a crypto-currency for the past year. To calculate the average price, you need to add up all the daily prices and divide them by the number of days.

### Calculate the standard deviation of the data set.

To do this, subtract the average from each price, square the result, and add up all the squared values. Then divide the result by the number of prices and take the square root of the result.

Divide the standard deviation by the mean and multiply the result by 100 to express it as a percentage. This is the coefficient of variation.

**To calculate the standard deviation of a data set, you can follow these steps:**

Calculate the average of the data set by adding all the values and dividing by the number of values.

For each value in the data set, subtract the average and square the result.

Add all the values squared from step 2.

Divide the result of step 3 by the number of values in the data set. This is called the variance.

Take the square root of the variance. This is the standard deviation.

### Here is the formula for calculating the standard deviation

standard deviation = √(∑(x – mean)^2 / n)

Where x is each value in the data set, mean is the average of the data set, and n is the number of values in the data set.

For example, let’s say you have a data set with the following values: 2, 4, 6, 8, 10. The mean of this data set is 6, and to calculate the standard deviation, you would do the following:

Subtract the mean from each value and square the result: (2 – 6)^2 = 16, (4 – 6)^2 = 4, (6 – 6)^2 = 0, (8 – 6)^2 = 4, (10 – 6)^2 = 16.

Add all the squared values: 16 + 4 + 0 + 4 + 16 = 40

Divide the result by the number of values in the data set: 40 / 5 = 8

Take the square root of the result: √8 = 2.83

The standard deviation of the data set is 2.83.

### Here is the formula for the coefficient of variation:

CV = (standard deviation / mean) * 100

For example, let’s say you have a dataset of daily prices of a crypto-currency over the past year. The mean of the data set is €500 and the standard deviation is €100. The coefficient of variation would be as follows

CV = (100 / 500) * 100 = 20%.

This would indicate that the crypto currency has a coefficient of variation of 20%, which means that the price tends to fluctuate around the average by about 20% on average.