Okay, I know most of you guys are in the the ER type financial analyst, but does anybody know about being a financial manager? I like the idea of ER, but I also like the idea of helping a single company with it’s finances like a “financial manager” (sometimes referred to as a financial analyst).
Anyway under job ads I continually see “will perform variance analysis”. I understand the general idea of variance analysis (“why was this not what it was suppose to be?”), but can anybody go more in depth about it? or suggest some good reading material to learn more about the process of doing it? Is there a leading software to use?
From the ads I’ve seen, variance analysis and obviously forecasting are the most noted.
I would start by knowing ANOVA tables like the back of your hand, regression model mispecification, every shape distribution under the sun… I dunno, stats seems like Phd work to be done well to me. Be able to handle and scrub large data sets with ease. I’d imagine most of these jobs just require you to be a cross sectional and time series regression master.
Variance analysis is about identifying the sources of risk/uncertainty in your estimates and/or forecasts. Technically, there is a difference between ordinary risk and uncertainty, but the sentence gives you the gist of what it is.
It is a statistics-intensive role, and getting a feel for how variances add up and how it depends on things like correlation would be pretty important.