Standard deviation

Standard deviation is a statistical measurement of volatility. It provides a good indication of volatility.It based on past data to measures the tendency of data to be spread out.When looking at the historic returns of a mutual fund, standard deviation can be used to measure the variation of expected return that has taken place in the past giving a sense of range of performance that can be expected given different probabilities of return for the future.- The smaller the difference between closing prices and the mean price, the lower the SD and the lower the volatility - The larger the difference between the closing prices and the average price, the higher the SD and volatility. Standard deviation is useful for investing in stock options, because it provides a measure of volatility.

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