How do you calculate the variance of a Monte Carlo simulation?
Variance is the average of the squared deviations from the mean. In other words, it’s the average of the squares of the differences between each value and the mean. For example, if you have a set of numbers {1, 2, 3, 4, 5}, then the average of these numbers is 3. The variance of this set of numbers is (3 - 1)^2 + (3 - 2)^2 + (3 - 3)^2 + (3 - 4)^2 + (3 - 5)^2 = 9.