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Glossary · PSX term

Standard deviation.

Standard deviation is a statistical measure of how spread out an investment's returns are.

Definition

In investing it is used as a gauge of volatility, with a higher value meaning returns vary more widely from the average. It helps compare the riskiness of different stocks or funds.

Worked example

A fund with returns clustered near its average has a lower standard deviation than one that swings widely.

Related on PSX Clarity

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Volatility
Term
Beta
Term
Sharpe ratio
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Risk tolerance

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