As we know that standard deviation is a calculation of how the values are changing with comparison or the respect of the mean or the average value, we represent this data in a graph, there are two deviations represented in graph of standard deviation, one which are positive to the mean which is shown on the right hand side of the graph and another is negative to the mean which are shown on the left hand side of the graph, the standard deviation graph is also known as bell curve graph in excel.
Excel Standard Deviation Graph / Chart
Standard Deviation is one of the important statistical tools which shows how the data is spread out. For example, in the stock market, how the stock price is volatile in nature.
Typically standard deviation is the variation on either side of the average or means value of the data series values. We can plot the standard deviation in the Excel graph, and that graph is called the “Bell-Shaped Curve.”
Bell CurveBell CurveBell Curve graph portrays a normal distribution which is a type of continuous probability. It gets its name from the shape of the graph which resembles to a bell. is the graph that is commonly used to gauge the performance appraisal of employees in companies. All the organizations work on performance appraisal for a specific period of time frame. Using this performance appraisal, they reward employees in terms of salary, promotions, etc.
They gauge employees on Low or Non Performers, Average Performers, and High Performers. When you plot a bell-shaped graph, it shows the highest probability of the outcome, and the probability of the outcome keeps going down when the bell shapes move to either side from the center point.
For example, look at the below Excel bell shapes curve graph.
Assume you are working in a team of 50 members, and your rating is very similar to the other team members. Then only a few employees got a higher rating, a majority will get an average rating, and a few will get a low rating. If you got 8 as a rating and your team member got 7 as the rating, there won’t be much of a difference here, isn’t it??
To make the comparison fair bell-shaped curve best fit to gauge the employee and rate, then reward them accordingly.
All the higher rating employees in the bell curve will be placed on the right-hand side of the bell curve, low rating employees will be placed on the left-hand side of the bell curve, and average employees will be placed in the center of the bell curve.
In order to understand the Excel Standard DeviationExcel Standard DeviationThe standard deviation shows the variability of the data values from the mean (average). In Excel, the STDEV and STDEV.S calculate sample standard deviation while STDEVP and STDEV.P calculate population standard deviation. STDEV is available in Excel 2007 and the previous versions. However, STDEV.P and STDEV.S are only available in Excel 2010 and subsequent versions. Graph or bell-shaped curve, we need two kinds of calculations here. One is MEAN or AVERAGE of the data series, and the second one is Standard Deviation (SD), which shows how to spread out the data series is.
For example, if the average score of the students in the class is 70 and SD is 5, then students scored within either side of the mean value, i.e., 70. The first range will be 65-70, and the second range will be 70-75.
How to Create a Standard Deviation Graph (Chart) in Excel?
For a better understanding of the Standard Deviation Graph (Chart) in Excel, let’s consider our real-life example of student’s marks in an examination.
I have taken 25 students sample data, and below are the scores of these 25 students in an examination.
The first thing we need to do is calculate the AVERAGE score of the examination. Apply the Average FormulaApply The Average FormulaThe average value represents the set of data values; the average from the whole data is calculated by adding all the set values and dividing them by the number of values. Average = (a1 + a2 + …. + an)/n.
we got the result as 7.
Secondly, calculate the Standard Deviation of the data series.
The result is shown below:
Note: Since I had taken sample data, I have used STDEV.S, which is used for sample data series.
Now in the B1 cell, enter normal distribution excelNormal Distribution ExcelNORMDIST or normal distribution is an inbuilt statistical function of excel that calculates the normal distribution of a data set with mean and standard deviation provided. formula, i.e., NORM.DIST.
x is nothing but our data point, so select A1 cell.
MEAN is the average value we have calculated, so give a link to the cell E1 and make it an absolute reference.
Next is SD to give a link to the cell E2 and make it an absolute excel referenceAbsolute Excel ReferenceAbsolute reference in excel is a type of cell reference in which the cells being referred to do not change, as they did in relative reference. By pressing f4, we can create a formula for absolute referencing..
The next thing is Cumulative. Select FALSE as the argument.
Now see the result.
Drag the formula to other cells to have normal distributionNormal DistributionNormal Distribution is a bell-shaped frequency distribution curve which helps describe all the possible values a random variable can take within a given range with most of the distribution area is in the middle and few are in the tails, at the extremes. This distribution has two key parameters: the mean (µ) and the standard deviation (σ) which plays a key role in assets return calculation and in risk management strategy. values.
Create a Standard Deviation Excel graph using the below steps:
- Select the data and go to the INSERT tab then, under charts select scattered chart then, select Smoother Scatter Chart.
- Now, we will have a chart like this.
- If needed, you can change the chart axis and title.
Conclusion: Our SD is 3.82, which is slightly higher, so our bell curve is wider. If the SD is small, then we will get a slim bell curve.
Things to Remember About Standard Deviation Graph in Excel
- MEAN, or AVG values are always the center point of the Excel Standard Deviation graph.
- Approximately 68.2% of the data series will be fitted in the range, i.e., MEAN – SD to MEAN + SD. (65-70)
- Approximately 95.5% of the data series will be fitted in the range i.e. 2 * (MEAN –SD) + 2 * (MEAN + SD).
- Approximately 99.7% of the data series will be fitted in the range i.e. 3 * (MEAN –SD) + 3 * (MEAN + SD).
- Excel Standard Deviation Graph shape depends on the SD value. The higher the SD value wide the bell curve, and the smaller the SD value, the slimmer the bell curve is.
- Complete knowledge of the bell curve can be best explained by the statistical person, and I am limited to the excel sheet.
Standard Deviation Graph in Excel Video
This has been a guide to the Standard Deviation Graph in Excel. Here we discuss how to create a Standard Deviation Chart / Graph in Excel along with practical examples and a downloadable excel template. You may learn more about excel from the following articles –