Plain-English definitions, reviewed by an independent investor
Standard Deviation
Standard deviation measures the typical spread of returns around the average — the common risk number.
Standard deviation measures the typical spread of returns around the average — the common risk number.
SD = √(Average of (Return − Mean)²)
Why it matters
It quantifies volatility in one comparable figure.
Common confusion
It treats upside and downside swings the same, which some find odd.
Frequently Asked Questions
Higher SD riskier?
Generally yes; the wider the spread, the less predictable the outcome.
SD vs beta?
SD is total wobble; beta is wobble relative to the market.