Measures of Location

Table  3.1 gives monthly stock prices  of three local companies for the years 2000 and 2001. The former Pharmacia Corporation (now Pfizer) has three missing values because the company did not exist before the merger of Pharmacia-Upjohn and Monsanto in March 2000.

  

Table 3.1: Monthly Stock Prices

Examine the dotplot of monthly stock prices  in Figure  3.1.

  

Figure 3.1: Dotplot of Monthly Stock Prices

The plot for Kellogg Co. is `located' farther to the left (i.e. the values are smaller). Pharmacia and Stryker seem to be located at approximately the same place on the line, but Stryker has more `spread'  or `variability' . Now, suppose some friends bought shares of Kellogg stock last year, how much do you think they paid per share? A good answer would be ``Around $27, give or take $3''. Would they have paid the same price for Pharmacia shares? No, Pharmacia stocks tended to fall ``around $50, give or take $7''. More precisely, here are the average and standard deviation of stock prices    for the three companies:

Company	Average $\pm$ SD
KELLOGG	27.18 $\pm$ 2.54
PHARMACIA	50.54 $\pm$ 6.82
STRYKER	48.22 $\pm$ 9.20