Some Data Rules

CONTENT & INTRODUCTION

Some data rules

80-20 Rule
Standard Deviation
Normal Curve
Correlation Coefficient
SOME DATA RULES .
NORMAL CURVE

The normal distribution, also known as the Gaussian or standard normal

distribution, is the probability distribution that plots all of its values in a
symmetrical fashion, and most of the results are situated around the
probability's mean. Values are equally likely to plot either above or below the
mean. Grouping takes place at values close to the mean and then tails off
symmetrically away from the mean.
SOME DATA RULES .
THE PARETO PRINCIPLE (80-20) RULE

The 80-20 is a ironclad rule that states that 80% of outcomes can be
recognized to 20% of all causes for a given event. In business, the 80-20 is
often used to point out that 80% of a company's revenue is generated by 20%
of its total customers. Therefore, the rule is used to help managers identify
and regulate which operating factors are most important and should receive
the most attention, based on an efficient use of resources.
PROTFOLIO DATA RULES .
WHAT IS CORRELATION COEFFICENT

The correlation coefficient is a measure that determines the degree to which

two variables movements are associated.
The range of values for the correlation coefficient is -1.0 to 1.0.
If a calculated correlation is greater than 1.0 or less than -1.0, a mistake has
been made.
A correlation of -1.0 indicates a perfect negative correlation, while a
correlation of 1.0 indicates a perfect positive correlation.
PROTFOLIO DATA RULES..
HOW TO CALCULATE CORRELATION COEFFICIENT
SOME DATA RULES .
STANDARD DEVIATION
Standard deviation is a measure of
the distribution of a set of data from its mean.
If the data points are further from the mean,
there is higher deviation within the data set.
Standard deviation is calculated as the square
root of variance by determining the variation
between each data point relative to the mean.
If broken down, in finance, standard deviation
is applied to the annual rate of return of an
investment to measure the investment's
volatility. Standard deviation is a statistical
measurement that sheds light on historical
volatility. For example, a volatile stock has a
high standard deviation, while the deviation of
a stable blue-chip stock is lower. A large
dispersion indicates how much the return on The Standard
the fund is deviating from the expected
normal returns. deviation
SOME DATA RULES .
HOW TO CALCULATE STANDARD DEVIATION
On calculator

https://www.youtube.com/watch?v=UTJZzX8tOy4
On excel

Use the Excel Formula =STDEV( ) and select the range of values which contain
the data. This calculates the sample standard deviation (n-1).
Use the web Standard Deviation calculator and paste your data, one per line.