SEMIVARIANCE Meaning and
Definition
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Semivariance is a statistical measure that quantifies the volatility or risk associated with negative deviations from the mean or target return of a dataset. It is a specialized variant of variance that only considers the squared differences between the observed values and the mean if those values are less than the mean.
In finance and investment analysis, semivariance is commonly used to assess the downside risk of an investment or asset. It focuses on measuring the dispersion of returns below a specified threshold, typically the mean or a predetermined minimum acceptable return. By considering only negative deviations, semivariance provides a more accurate representation of the downside risk as it reflects the potential for losses.
The calculation of semivariance involves finding the squared differences between each return observation and the mean, but only if the return is below the mean. These squared deviations are then summed and divided by the number of observations below the threshold, resulting in the semivariance.
By using semivariance, investors and analysts gain a better understanding of the potential downside risk associated with an investment. It is particularly useful for risk-averse individuals who are more focused on avoiding losses than maximizing gains. Apart from its application in the financial field, semivariance can also be utilized in various other domains where measuring downside risk is important, such as insurance, agriculture, and engineering.
Common Misspellings for SEMIVARIANCE
- aemivariance
- zemivariance
- xemivariance
- demivariance
- eemivariance
- wemivariance
- swmivariance
- ssmivariance
- sdmivariance
- srmivariance
- s4mivariance
- s3mivariance
- senivariance
- sekivariance
- sejivariance
- semuvariance
- semjvariance
- semkvariance
- semovariance
- sem9variance
Etymology of SEMIVARIANCE
The term "semivariance" is derived from the combination of two words: "semi" and "variance".
The word "semi" is a Latin prefix meaning "half" or "partially". It is derived from the Latin word "semi-" or "semis".
The word "variance" is a statistical term used to measure the dispersion or variability of a set of data points. It is derived from the Latin word "variantia", which means "difference" or "diversity".
Therefore, when combining "semi" and "variance" in the term "semivariance", the word refers to a measure of dispersion or variability that is only considering the negative deviations or downside risk. Semivariance is often used in finance and investment analysis to analyze and evaluate the downside risk or volatility of an investment or portfolio.
