Re: What is standard deviation?
From Stanford Wong's BJ21
Posted by Curious Amateur on 8 Oct 1997, at 4:12 p.m., in response to What is standard deviation?, posted by hi! on 8 Oct 1997, at 3:09 p.m.
Standard Deviation is the square root of Variance, which is measure of the wildness of the data. Higher Variance (and SD) means greater wildness.
Formally, Standard Deviation is computed as follows:
For all values of x, compute (x-mu)exp2*f(x), sum all and take the square root. Where mu is the mean of all values of x, and f(x) is the probablility of occurrence of a given value of x.
If you have a sample of n values taken from a population, you can estimate the mean by averaging all values. Then you can estimate the Standard Deviation by taking the square root of (the sum of the squares of (each value minus the mean), total quantity divided by n-1).
One of these days I have to learn to do equations in Internet.
Anyway, greater Standard Deviation means greater risk of ruin.