You can get an idea about some of the principles of variation by taking a look at everyone's favorite topic, corn prices. If you examine the average national corn price for the last ten years you will find that it was $2.28/bu with a standard deviation of about $0.43. Just by looking at those two numbers you can get an idea that there is some considerable variation going on in the historical pattern of corn prices.
Calculating the coefficient of variation (CV) yields 0.189, which you will recall is the standard deviation divided by the mean. Now if I were to ask you if the volatility in the corn market had increased since October 2006 what would your gut reaction be? I suspect you would be suckered in to saying "yes".
