Standard deviation

    Standard Deviation (σ)

    Risk & Portfolio

    A measure of the dispersion of returns around the average. Higher standard deviation means higher volatility/risk.

    Formula

    σ = √[Σ(xi - μ)² / n]

    Why it matters

    Used to measure investment risk. Two-thirds of returns typically fall within 1 standard deviation of average.

    Indian example

    Related terms

    VolatilityVarianceRisk

    Learn the concept

    Mutual funds, ETFs, AIFs →

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