Category Archives: Standard Deviation

April 16, 2025 · 8:26 am

Binomial Expansion – deriving the formula for Variance

We have seen how the formula for mean (expected value) was derived, and now we are going to look at variance.

In general variance of a probability distribution is

(1)   \begin{equation*} Var(X)=E(X^2)-(E(X))^2\end{equation*}

We are going to start by calculating E(X^2)

    \begin{equation*}E(X^2)=\sum_{x=0}^nx^2p(x)\end{equation}

    \begin{equation*}E(X^2)=\sum_{x=0}^nx^2\begin{pmatrix}n\\x\end{pmatrix}p^x(1-p)^{n-x}\end{equation}

    \begin{equation*}E(X^2)=\sum_{x=0}^n x^2\frac{n!}{(n-x)!x!}p^x(1-p)^{n-x}\end{equation}

The x^2 cancels with the x! to leave x on the numerator and (x-1)! on the denominator.

Also, when x=0, x^2=0 and we can start the sum at x=1

    \begin{equation*}E(X^2)=\sum_{x=1}^n x\frac{n!}{(n-x)!(x-1)}!p^x(1-p)^{n-x}\end{equation}

Let y=x-1 and m=n-1, when x=n, y=n-1 and hence y=m and when x=1, y=0

Our equation is now

    \begin{equation*}E(X^2)=\sum_{y=0}^m (y+1)\frac{(m+1)!}{(m+1-(y+1))!y!}p^{y+1}(1-p)^{m+1-(y+1)}\end{equation}

Simplify

    \begin{equation*}E(X^2)=\sum_{y=0}^m(y+1)\frac{(m+1)!}{(m-y)!y!}p^{y+1}(1-p)^{m-y}\end{equation}

    \begin{equation*}E(X^2)=\sum_{y=0}^m(y+1)(m+1)\frac{m!}{(m-y)!y!}p\times p^y(1-p)^{m-y}\end{equation}

    \begin{equation*}E(X^2)=\sum_{y=0}^m p(y+1)(m+1)\frac{m!}{(m-y)!y!} p^y(1-p)^{m-y}\end{equation}

    \begin{equation*}E(X^2)=\sum_{y=0}^m p(y+1)(m+1)p(y)\end{equation}

    \begin{equation*}E(X^2)=p(m+1)(\sum_{y=0}^myp(y)+\sum_{y=0}^mp(y))\end{equation}

\sum_{y=0}^mp(y)=1 and \sum_{y=0}^myp(y)=E(Y)

    \begin{equation*}E(X^2)=p(m+1)(E(Y)+1)\end{equation}

E(Y)=mp

    \begin{equation*}E(X^2)=p(m+1)(mp+1)\end{equation}

m+1=n

    \begin{equation*}E(X^2)=pn((n-1)p+1)\end{equation}

    \begin{equation*}E(X^2)=n^2p^2-np^2+np\end{equation}

Now from equation 1

    \begin{equation*}Var(X)=E(X^2))-(E(X))^2\end{equation}

    \begin{equation*}=Var(X)=n^2p^2-np^2+np-n^2p^2\end{equation}

    \begin{equation*}Var(X)=-np^2+np\end{equation}

(2)   \begin{equation*}Var(X)=np(1-p)\end{equation*}

and the standard deviation is

(3)   \begin{equation*}\sigma_X=\sqrt{np(1-p)}\end{equation*}

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