Variability, almost by definition, is the extent to which data points in a statistical distribution or data set diverge—vary—from the average value, as well as the extent to which these data points differ from each other. In financial terms, this is most often applied to the variability of investment returns. Understanding the variability of investment returns is just as important to professional investors as understanding the value of the returns themselves. Investors equate a high variability of returns to a higher degree of risk when investing.