Standard Deviation Calculator

Standard deviation measures investment volatility and risk. Higher standard deviation means more volatile returns. For stocks, 15-25% is typical. Bonds usually have 3-8%. Used to assess portfolio risk and compare investment options.

Sample standard deviation (n-1) used for limited data samples. Population standard deviation (n) used for complete datasets. For investment analysis, typically use sample standard deviation since we have historical data samples, not entire population.

Portfolio standard deviation considers asset weights, individual volatilities, and correlations. Formula: √(w₁²σ₁² + w₂²σ₂² + 2w₁w₂σ₁σ₂ρ₁₂). Diversification reduces portfolio risk when assets are not perfectly correlated.

S&P 500: ~15% annually. Large-cap stocks: 15-25%. Small-cap stocks: 25-35%. Individual stocks: 20-50%+. Lower is generally better for risk-averse investors. Compare to benchmarks and risk tolerance.

Standard deviation and volatility measure the same thing - price fluctuation magnitude. Volatility is often expressed as annualized standard deviation. Both help assess investment risk and return consistency.

Monthly for portfolio review. Quarterly for formal risk assessment. Daily for active trading. Use rolling periods (1-year, 3-year) for trend analysis. Recalculate after major portfolio changes or market events.