Standard Deviation
Definition
A statistical measure of the dispersion of returns around the mean, representing the volatility of an asset. Higher standard deviation indicates greater variability and risk.
Formula / Rules
σ = √[Σ(Xi − X̄)² / (N−1)]
Example
A stock with annualized standard deviation of 30% is much more volatile than one with 10% — important for position sizing.
Related Terms
Frequently Asked Question
What is Standard Deviation in finance?
Standard deviation measures return dispersion around the mean — the core measure of investment volatility. Sharpe ratio divides excess returns by standard deviation to give risk-adjusted returns.
APA Citation
Last updated:
· Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.