Financial modelling terms explained

Standard Deviation

Standard deviation is used in finance to measure the amount of variation or dispersion from the mean (average) of a series of numbers. Standard deviation is a statistical measure of the dispersion of a set of data from its mean.

What is Standard Deviation?

Standard deviation is a measure of the dispersion of a set of data points from their mean. It is calculated by taking the square root of the variance of the data set. Standard deviation is often used to measure the risk of an investment or the variability of a return.

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