What is one of the main outcomes when calculating variance?

One of the main outcomes when calculating variance is to assess the distribution of returns. Variance is a statistical measure that expresses the degree of variation or dispersion in a set of values. In finance, it is commonly used to evaluate the volatility of returns on an investment or a portfolio. By calculating variance, investors can understand how much the returns deviate from the mean return, which provides insights into investment risk. A higher variance indicates a wider range of potential outcomes and greater uncertainty, while a lower variance suggests that returns are clustered closely around the mean. This understanding of variability is crucial for making informed investment decisions and managing risk effectively.