Unknown Indicator

Standard Deviation In A Nutshell

The more volatile a given equity instrumet, the larger its standard deviation. Standard deviation helps money managers to capture volatility of the portfolio into a single number. For most traded equities, future monthly returns are usually destributed within one standard deviation of its average return (68% of the time),  and within two standard deviations 95% of the time.

The standard deviation is one of the main statistical indicators commonly used to measure confidence in statistical conclusions. For example, the margin of error in polling data is determined by calculating the expected standard deviation in the results if the same poll were to be conducted multiple times. In finance and investing Standard Deviation is usually used to measure risk.

Closer Look at Standard Deviation

Other deviation levels to watch out for are the 1.5 and 2 standard deviation level. At 2 standard deviations, the likely hood that your data point occurs within 2 standard deviations increases to roughly 95%. Again, just like any tool, this may not be 100% accurate, but it certainly have proven true more times than not. Using standard deviation is simple statistics and it takes emotion out of the picture. Another way people use standard deviation is to incorporate volume, which takes a little time to master the equation, but is certainly possible. Identifying what tools to use for you investing needs can take time, but a standard deviation tool is one to keep your eye on. It is reliable compared to the others and has proven to be one of the more useful out of the many that exist.

Trending Themes

If you are a self-driven investor, you will appreciate our idea-generating investing themes. Our themes help you align your investments inspirations with your core values and are essential building blocks of your portfolios. A typical investing theme is an unweighted collection of up to 20 funds, stocks, ETFs, or cryptocurrencies that are programmatically selected from a pull of equities with common characteristics such as industry and growth potential, volatility, or market segment.
Corona Opportunity Idea
Corona Opportunity
Invested few shares
Blockchain Idea
Blockchain
Invested a lot of shares
Impulse Idea
Impulse
Invested over 100 shares
Warren Buffett Holdings Idea
Warren Buffett Holdings
Invested few shares
FinTech Idea
FinTech
Invested over 40 shares
Artificial Intelligence Idea
Artificial Intelligence
Invested few shares
Momentum Idea
Momentum
Invested few shares
Disruptive Technologies Idea
Disruptive Technologies
Invested over 100 shares
Check out your portfolio center.
Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stocks Directory module to find actively traded stocks across global markets.

Other Complementary Tools

Sectors
List of equity sectors categorizing publicly traded companies based on their primary business activities
Fundamental Analysis
View fundamental data based on most recent published financial statements
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Watchlist Optimization
Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets
Equity Valuation
Check real value of public entities based on technical and fundamental data
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Stock Screener
Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.