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Heterogeneity of variance may be more than a statistical nuisance—it may be of direct interest as a result of individual differences. In studies of short-term fluctuation, individual differences may relate to the magnitude of within-person variation as well as to level of an outcome or its covariation with other processes. Although models for heterogeneous variances have been utilized in group contexts (i.e., dispersion models), they are not usually applied in examinations of intraindividual variation. This work illustrates how an extension of the multilevel model for heterogeneous variances can be used to examine individual differences in level, between- and within-person covariation, and magnitude of within-person variation of daily positive and negative mood in persons with dementia.