Standard Deviation

Standard deviation measures how much individual values in a group deviate from the average or mean score for the group. In other words, the value of standard deviation helps show how many subjects in the group score within a certain range from the mean score for the group. In financial markets it is used as a method of assessing how variable or volatile a price is likely to be. The bigger the standard deviation the more widespread are the price movements and the more volatile the performance of the stock, yield or financial instrument.