# standard deviation

Definitions (3)
Related Terms
1. Investment: Measure of the variability (volatility) of a security, derived from the security's historical returns, and used in determining the range of possible future returns. The higher the standard deviation, the greater the potential for volatility.
2. Marketing: Measure of the difference between an average (arithmetic mean) and the individual values included in the average, such as the variation between the response to the same advertisement in different media vehicles.
3. Statistics: Measure of the unpredictability of a random variable, expressed as the average deviation of a set of data from its arithmetic mean and computed as the positive square root of the variance.
Customarily represented by the lower-case Greek letter sigma (s), it is considered the most useful and important measure of dispersion which has all the essential properties of the variance plus the advantage of being determined in the same units as those of the original data. Also called root mean square (RMS) deviation.

## Use 'standard deviation' in a Sentence

In a bell curve, the most expected values are considered to be those that are one standard deviation away from the mean.
Susan tried to find a new investment for her portfolio that had a low standard deviation, one that would not worry her by increasing and decreasing in price rapidly.
I tend to avoid investing in stocks whose prices are characterized by a high standard deviation because I prefer to invest in lower risk entities with lesser volatility.

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