Standard+deviation

What do you understand by standard deviation? Standard deviation is a statistical measure of spread data from its mean. The more spread apart the data, the higher the deviation. Standard deviation is calculated as the square root of variance.

In finance, Standard deviation is applied to the annual rate of return of an investment to measure the investment's volatility. Standard deviation is also known as historical volatility and is used by investors as a gauge for the amount of expected volatility. (Source; [|http://www.investopedia.com/terms/s/standarddeviation.asp#ixzz1YXcVWWlc] ).


 * Formula**:

|| **Population Standard Deviation** ||
 * **Standard Deviation**

where Σ = Sum of X = Individual score M = Mean of all scores N = Sample size (Number of scores)

Variance :

Variance = s2 (source;[]) For example: Imagine we have two lists of stock prices. A = ($1.02, 1.04, 1.05, 1.05, 1.06), B = ($100.02, 100.04, 100.05, 100.05, 100.06). A and B both have the same standard deviation, approximately 1.36 cents. In both lists, the average distance between the each price in the list and the middle of the list is about $0.0136.