Standard Deviation

What is it? Standard deviation is a common statistical tool used to measure the volatility in the performance of a single security or an entire portfolio, typically by calculating monthly returns over a period of 36 months. The result is usually reported on an annualized basis. A security with a high standard deviation has a lot of variation in its monthly returns. Such volatility generally indicates that there is a significant downside risk. Short-term bonds often have standard deviations of less than 1 while precious metals stocks and funds can have standard deviations of 25 or higher.

Added By: Claire

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