Standard Deviation

A statistical measure of the dispersion of a data set from its mean, used in finance to quantify the volatility of an asset's returns. A stock with a high standard deviation of daily returns is considered more volatile and therefore riskier than one with a low standard deviation. Standard deviation is a key input in the Sharpe ratio, the Black-Scholes options pricing model, and Bollinger Bands, making it one of the most foundational concepts in quantitative finance.