Glossary

Standard Deviation

DEFINITION

Standard deviation is a statistical measure showing how spread out data points are from the mean. It is found by taking the square root of the variance. The more widely the data points are spread, the higher the standard deviation. In investing, a volatile stock has a high standard deviation, while a more stable stock has a lower one.

ELI5

It shows how far numbers usually move away from the average. Big spread means high standard deviation, while small spread means low standard deviation.

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