What is Standard Deviation (Volatility)?
Standard deviation measures how widely a stock's returns fluctuate around its average — the most common quantitative measure of investment risk.
Formula
σ = √[Σ(Returns - Average Return)² / (n-1)]
How to Interpret
Higher standard deviation means more volatile (riskier) returns. Use alongside Sharpe ratio to assess if the extra risk is being compensated.
Typical Ranges
Blue-chips: 15-25% annualized, Mid-caps: 25-40%, Small-caps: 35-60%