Week 40 Day 1: Standard Deviation: The Ruler for Risk

Standard deviation measures how much an investment's returns vary from its average. A stock with 15% average return and 20% standard deviation will typically bounce between -5% and +35% in any given y...

Standard deviation measures how much an investment's returns vary from its average. A stock with 15% average return and 20% standard deviation will typically bounce between -5% and +35% in any given year. Higher standard deviation means a wilder ride -- and more opportunities to panic.