Variance can be calculated in two ways:

1. Variance assumes that the returns series is a sample of the population. This is the calculation most commonly used.
   If we denote by the mean of the returns, the variance is:
   
   Var(r₁, ..., r_n) =
   
   where r₁, ..., r_n is a return series, i.e., a sequence of returns for n time periods.
2. Population Variance assumes that the return series is the population.
   
   PVar(r1, ..., rn) =