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Enroll today Corporate Finance Institute Courses Programs Certification Programs Financial Modeling Valuation (FMVA) Certified Banking Credit Analyst (CBCA) Capital Markets Securities Analyst (CMSA) Course Bundles Machine Learning Python Course Catalog Full Catalog For Business Account Settings Log Out My Dashboard Log In Get Started Menu Courses Programs Certification Programs Financial Modeling Valuation (FMVA) Certified Banking Credit Analyst (CBCA) Capital Markets Securities Analyst (CMSA) Course Bundles Machine Learning Python Course Catalog Full Catalog For Business Account Settings Log Out Log In Get Started COVARIANCE.P Function Calculates the covariance of two given set of values Home Resources Excel Resources Functions COVARIANCE.P Function What is the Covariance Excel Function The covariance Excel function is categorized under Statistical functions.

Functions List of the most important Excel functions for financial analysts.

This cheat sheet covers 100s of functions that are critical to know as an Excel analyst It calculates the joint variability of two random variables, given two sets of data.

Suppose, as a financial analyst Financial Analyst Job Description The financial analyst job description below gives a typical example of all the skills, education, and experience required to be hired for an analyst job at a bank, institution, or corporation.

Perform financial forecasting, reporting, and operational metrics tracking, analyze financial data, create financial models, that we wish to determine whether greater income accompanies greater levels of education in a population or not.

In such a scenario, we can use the COVARIANCE.P function.

It was introduced in MS Excel 2010 to replace COVAR, with improved accuracy over its predecessor.

Covariance Formula in Excel COVARIANCE.P(array1, array2) The COVARIANCE.P function uses the following arguments: Array1 (required argument) This is a range or array of integer values.

Array2 (required argument) This is a second range or array of integer values.

The data should contain numbers, names, arrays, or references that are numeric.

The data sets should be of the same size, with the same number of data points.

The data sets should not be empty, nor should the standard deviation of their values equal zero.

How to use the Covariance Excel Function To understand the uses of the function, let us consider a few examples: Example 1 Covariance Excel Suppose we are given the monthly returns of two assets, gold and bitcoin, as shown below: We wish to find out covariance in Excel, that is, to determine if there is any relation between the two.

The relationship between the values in columns C and D can be calculated using the formula COVARIANCE.P(C5:C16,D5:D16).

Covariance in Excel is a statistical measurement of the strength of the correlation between two sets of variables, and is calculated by the following equation: Where: x and y are the sample means (averages) of the two sets of values n is the sample size The formula gives the result 0.0008, which indicates a negative correlation between the two assets.

Notes about the Covariance Excel Function The function is available from MS Excel 2010.

VALUE error Occurs when one or both of the supplied data arrays are empty.

NA error Occurs if the given arrays are of different lengths.

Click here to download the sample Excel file Additional resources Thanks for reading CFIs guide to important Excel functions By taking the time to learn and master these functions, youll significantly speed up your financial analysis.

To learn more, check out these additional CFI resources: Excel Functions for Finance Excel for Finance This Excel for Finance guide will teach the top 10 formulas and functions you must know to be a great financial analyst in Excel.

This guide has examples, screenshots and step by step instructions.

In the end, download the free Excel template that includes all the finance functions covered in the tutorial Advanced Excel Formulas Course Advanced Excel Formulas You Must Know Advanced Excel Formulas Must Know These advanced Excel formulas are critical to know and will take your financial analysis skills to the next level.

Learn the top 10 Excel formulas every world-class financial analyst uses on a regular basis.

These skills will improve your spreadsheet work in any career Excel Shortcuts for PC and Mac Excel Shortcuts PC Mac Excel Shortcuts - List of the most important common MS Excel shortcuts for PC Mac users, finance, accounting professions.

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