What Is Standard Deviation in Finance?
In finance it is often used as a measure of how much prices swing (OpenStax).
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1.What does the standard deviation tell you?
In finance it is often used as a measure of how much prices swing (OpenStax).
2.Funds A (3, 4, 5, 6, 7) and B (-3, 1, 5, 9, 13) have which average return?
Add up each set and divide by five: both averages come out at exactly 5.
3.What is step two of the calculation?
Squaring removes the minus signs, and it keeps every gap in your count because the plain gaps cancel to zero.
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Sources (3)
- OpenStax, Introductory Statistics 2e, Abschnitt 2.7 "Measures of the Spread of the Data"
- Wikipedia, Standard deviation (Abschnitte Finance
- Eigene Rechnung: synthetische Rendite-Reihen A
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