Standard Deviation

Standard deviation quantifies the extent to which each observed value in a dataset differs from the mean value. It provides a measure of the data’s dispersion and indicates the extent to which specific data points deviate from the overall average. In the realm of investing, standard deviation aids in calculating the current rate of return on an investment concerning its historical mean, thereby revealing the investment’s historical volatility. High standard deviation is commonly associated with volatile investments, while stable investments typically exhibit low standard deviations.