Standard deviation

Standard deviation measures how much the values of an investment or financial dataset vary from their average. It helps investors understand how widely returns can fluctuate over a given period, providing an indication of the level of volatility associated with an investment.

A higher standard deviation generally indicates greater volatility, meaning returns have tended to move further from their average. A lower standard deviation suggests more consistent performance. This makes standard deviation a useful tool when comparing investments and assessing the level of risk within a portfolio.