#### How To Calculate A Variance Estimator in Excel

Variance refers to how widely data sets are scattered around their mean value. We can estimate the variance from a sample of data or from the entire population, all the data.

For the purposes of this guide, test data has been created in document Variance Estimator Sample Data.

## Creating a Variance Estimation of a population – VAR.P

In this scenario a business owner wants to estimate the variance for the annual review ratings for all their employees. So, a population variance estimation is needed.

1. Open Variance Estimator Sample Data, click the VAR.P tab.
2. Select the cell where you want to display the result (e.g., E6).
3. Enter the formula: =VAR.P(B6:B12)
4. The variance estimate for the population will appear in cell E6.

## Creating a Variance Estimation of a sample – VAR.S

In this scenario the business owner wants to estimate the variance for the annual review ratings for just the managers. So, we will use the Sample function to estimate the variance.

1. Go to the VAR.S tab.
2. Select the cell where you want to display the result (e.g., E6).
3. In E6, type =VAR.S(
4. Select the manager ratings – C10 to C12, press Enter, Excel adds the end bracket and the variance estimate appears in E6.

If your data contains text or logical values, then use the VARA function for sample and VARPA for population data. Where text and logical values are present in data, they are treated as follows:

• Text is given a value of 0.
• TRUE is evaluated as 1.
• FALSE is evaluated as 0.