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What is Standard Deviation?
The concept of standard deviation was first introduced in the year 1893 by Karl Pearson. It is the most widely used and most essential assessment of analyzing dispersion. The importance of this concept lies in the truth that it does not have any of the defects which could be found in previous models. The concept is also referred to as Root-Mean Square Deviation and is represented by sigma or the small Greek letter σ.
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Why is it important?
The concept plays a major role in finance. This type of deviation is on the return rate of any type of investment and it is an assessment of the volatility of that investment. This type of deviation actually helps determine the uncertainty.
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