how can the coefficient of variation cv be used 
the coefficient of variation is used in many different fields including chemistry engineering physics economics and neuroscience other than helping when using the risk reward ratio to select investments it is used by economists to measure economic inequality outside of finance it is commonly applied to audit the precision of a particular process and arrive at a perfect balance example of coefficient of variation cv for selecting investmentsfor example consider a risk averse investor who wishes to invest in an exchange traded fund etf which is a basket of securities that tracks a broad market index the investor selects the spdr s p 500 etf spy the invesco qqq etf qqq and the ishares russell 2000 etf iwm then the investor analyzes the etfs returns and volatility over the past 15 years and assumes that the etfs could have similar returns to their long term averages for illustrative purposes the following 15 year historical information is used for the investor s decision based on the approximate figures the investor could invest in either the spdr s p 500 etf or the ishares russell 2000 etf since the risk reward ratios are approximately the same and indicate a better risk return tradeoff than the invesco qqq etf 