The range is a numerical value that indicates the difference between the maximum and minimum value of a population or statistical sample.
The range is usually used to obtain the total dispersion. That is, if we have a sample with two observations: $10 and $100, the range will be $90.
Especially in finance, the range is very useful to see how big a variation or change could become. It is also worth mentioning that, on many occasions, the range is not a fixed measure. For example, let's imagine that the growth of the gross domestic product (GDP) of a country has been between 3 and 5% during the last 20 years. The range for this data will be 2% but this does not mean that it will always be that. So if in year 21, the growth is -1%, the range of the last 21 years, will go from 2% to 6%.
It is also known as a statistical tour.
To calculate the range of a sample or statistical population we will use the following formula:
R = Max x - Min x
How is this interpreted? This means that during the last 4 years the maximum variation that has occurred has been 38,955 microphones produced. Graphically we can see it as follows:
The green point is the maximum, the red point the minimum, and the yellow dotted line to the right is the difference. That is, the range.
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