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Standard deviation

• The most common statistical indicator of an asset's risk; it measures (in the same units as the expected value) the dispersion of possible values around the expected value.

• Is a measure of volatility, risk, or statistical dispersion. The standard deviation is calculated by:

  • computing the mean of the series
  • then taking the deviation by subtracting the mean from each observation,
  • squaring the differences or deviations for each observation,
  • dividing the sum of the squared deviations by the number of observations
  • and then calculating the positive square root of the sum of squared deviations.

In other words, the standard deviation is the positive square root of the variance.

• The square root of the variance. A measure of dispersion of a set of data from their mean.

 
 Embedded terms in definition
 Dispersion
Expected value
Mean
Risk
Series
Variance
Volatility
 
 Related Terms
 Gold exchange standard
Gold standard
Standard & poor's 500 index
Standard & poor's corporation
Standard & poor's financial strength
Standard debt provisions
Standard error
Standard industrial classification code
Standard normal distribution or standardized normal distribution
Std deviation rating std deviation rating

<< Standard debt provisions Standard error >>

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