Financial Terms / standard deviation

Understanding Standard Deviation

Standard deviation is a measure of variation in a data set, expressed in the same units as the data. It is useful because it is a summary statistic that can be used to compare samples and estimates.


SD = sqrt(Σ (x - mean)2 / n)

How do I calculate the standard deviation?

If you need to calculate the standard deviation of a set of data, a useful formula to use is SD = sqrt(Σ (x - mean)2 / n). To get started, you'll need to first calculate the mean of your data. Once you have the mean, you can calculate the squared differences between each data point and the mean. After you've added up the squared differences, you can use the formula above to calculate the standard deviation.

For more information on calculating standard deviation, you can reference helpful tutorials online, or find helpful functions in programs like Sourcetable. 

What is the formula for Standard Deviation?

The formula for standard deviation is SD=∑∣x−xˉ∣2n.

What is Standard Deviation used for?

Standard deviation is used to measure the spread of a data set, or how far apart the data points are from each other and from the mean.

Key Points

How do I calculate standard deviation?
SD = sqrt(Σ (x - mean)2 / n)
Standard Deviation is a Statistic Used in Finance
Standard deviation is a statistic used in finance to measure how dispersed a dataset is. It is calculated as the square root of the variance by determining the deviation of each data point from the average.
Low Standard Deviation for Stable Stocks
Stable blue-chip stocks generally have a low standard deviation, as their prices tend to remain stable over time.

Make Better Decisions
With Data

Analyze data, automate reports and create live dashboards
for all your business applications, without code. Get unlimited access free for 14 days.