Standard Deviation

Standard Deviation is a statistical measurement extensively used in technical analysis in the world of finance. It helps to understand the volatility or the dispersion of a set of values, whether that be returns on a stock, market indices or for any other investment securities. A low standard deviation means that values tend to be closely clustered to the average (or mean), while a high standard deviation indicates that the values are spread out over a wide range.

In investment terms, securities with higher standard deviation are considered more volatile or risky as their prices can change dramatically in a short period, potentially leading to significant losses or gains. Conversely, a security with a low standard deviation is seen as less volatile because its value doesn’t fluctuate as dramatically, generally regarded as a safer investment.

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