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Variance of sums + law of total variance

$\mathrm{Var}(X+Y) = \mathrm{Var}(X) + \mathrm{Var}(Y)$ ONLY when $X,Y$ are uncorrelated. Otherwise you need Law of Total Variance β€” interviewers love testing the difference.

Method · Variance Linearity
Intro

Variance of a sum of independent things is the sum of variances. When components depend on each other you carry covariance terms; when they depend on a hidden variable you split with the law of total variance: $\mathrm{Var}(Y) = E[\mathrm{Var}(Y\mid X)] + \mathrm{Var}(E[Y\mid X])$.

βœ“ Intro Β· expand
Independent · Legal