Transformation and Variance: Difference between pages

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1. ''Financial instruments - financial risks - risk management.''
1. ''Maths and financial maths.''


The changing of one dimension of financial risk into another.
A statistical measure of the spread of given data around their mean.  


For example, a short-term ''foreign exchange swap'' temporarily transforms short-term borrowings - or deposits - from one currency into another.
The greater the variance, the greater the spread.  The variance is calculated from the mean as the average of the squared differences of each data point from the mean.


Other examples of this kind of transformation include ''interest rate transformation'' and ''maturity transformation.''
Sampling may be used to estimate the variance of an underlying parent population from the variance of a sample selected from the parent population.


The estimated variance of the parent population is greater than the variance of the sample by a factor of n/[n-1]
(where n = the number of items in the sample).


2''Change management - structural change.''
This type of variance is often denoted ''Var'' or ''SD<sup>2</sup>'' (being the square of [[standard deviation]], ''SD'').


Substantial changes expected to be long-term.


In this sense, transformation is usually planned for, and expected to be beneficial.
2. ''Variability.''


Examples include ''business transformation'' and ''treasury transformation''.
More generally, the degree of variability in an item, especially the degree of variabilty over time.


Variance in this wider sense may be quantified in a number of different ways (which can include the stricter statistical measure of variance, as defined in 1. above).


3.  ''Working effectively with others.''


Fundamental and positive shifts in people's habitual ways of doing things.
3. ''Management accounting and generally.''


For example, in ''transformational coaching.''
More generally still, any difference, especially a difference between two related financial variables.  


 
For example in management accounting, the difference between the actual cost of an item and the budgeted cost.
4.  ''Financial maths.''
 
The systematic conversion of one item or distribution into another.
 
For example, transforming between a ''normal distribution'' and a ''standardised normal distribution''.




== See also ==
== See also ==
* [[Borrowing]]
* [[Adverse]]
* [[Business transformation]]
* [[B/(W)]]
*[[Collateral transformation]]
* [[Covariance]]
* [[Currency]]
* [[Delta-normal method]]
* [[Deposit]]
* [[Elasticity]]
* [[Finance transformation]]
* [[Flexible budgeting]]
* [[Financial instrument]]
* [[Mean]]
* [[Financial risk]]
* [[Mean-variance efficiency]]
* [[Foreign exchange swap]]
* [[Minimum variance portfolio]]
* [[Interest rate transformation]]
* [[Standard deviation]]
* [[Maturity transformation]]
* [[Value at risk]]
* [[Normal distribution]]
* [[Variance analysis]]
* [[Risk management]]
* [[Short term]]
* [[Standardised normal distribution]]
* [[Transformational coaching]]
* [[Treasury transformation]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]
[[Category:The_business_context]]
[[Category:Identify_and_assess_risks]]
[[Category:Identify_and_assess_risks]]
[[Category:Manage_risks]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Risk_reporting]]
[[Category:Risk_reporting]]
[[Category:Cash_management]]
[[Category:Financial_products_and_markets]]
[[Category:Financial_products_and_markets]]
[[Category:Liquidity_management]]
[[Category:Treasury_operations_infrastructure]]

Latest revision as of 12:44, 21 December 2020

1. Maths and financial maths.

A statistical measure of the spread of given data around their mean.

The greater the variance, the greater the spread. The variance is calculated from the mean as the average of the squared differences of each data point from the mean.

Sampling may be used to estimate the variance of an underlying parent population from the variance of a sample selected from the parent population.

The estimated variance of the parent population is greater than the variance of the sample by a factor of n/[n-1] (where n = the number of items in the sample).

This type of variance is often denoted Var or SD2 (being the square of standard deviation, SD).


2. Variability.

More generally, the degree of variability in an item, especially the degree of variabilty over time.

Variance in this wider sense may be quantified in a number of different ways (which can include the stricter statistical measure of variance, as defined in 1. above).


3. Management accounting and generally.

More generally still, any difference, especially a difference between two related financial variables.

For example in management accounting, the difference between the actual cost of an item and the budgeted cost.


See also