Note: If a stock has a high standard deviation it means the price swings widely, which is a greater risk for investors. Each carries different expectations for its return to stock investors. For example, the stock of a stable blue-chip company tends to have a lower standard deviation, while a fast-growing tech startup is more likely to have a higher standard deviation. "A higher standard deviation means the investment has more volatility potential with higher highs and lower lows," says Brian Stivers, an investment advisor and founder of Stivers Financial Services.Īs an investor, you can consider the standard deviation of a particular asset to evaluate what rate of return is acceptable for the risks you are taking on. That measurement can be used to predict price performance trends and how much an investment might fluctuate from its expected return over a given period of time. Standard deviation offers a measurement of the volatility for a particular asset.
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