Standard Deviation

[ˈstan-dərd di-ˈvē-zhən]

What is the definition of Standard Deviation?

A statistical measure that quantifies the amount of variation or dispersion of a set of values. It indicates how much individual values in a data set tend to deviate from the mean or average of the distribution.

Using Standard Deviation in an Example

In finance, standard deviation is used to measure the volatility of investment returns. For example, a mutual fund with a high standard deviation has returns that vary widely from its average return, indicating higher volatility and potentially higher risk.

Using Standard Deviation in a sentence

The financial analyst noted that the standard deviation of the stock's returns was quite high, suggesting significant volatility and risk.

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