Now let’s talk about Standard Deviation from a “non-standard” point of view.

The Standard Deviation is an indicator that looks at dispersed data around a position index; it is one of the few statistical indicators that are able to measure fluctuation around the mean. In finance, especially in Italy, this indicator has become increasingly used to assess the risk of a financial instrument, illustrating that the higher the standard deviation, the higher the risk the investor runs. This association is very approximative and misleading; the standard deviation is not an indicator of risk but one of uncertainty since when it’s very high, estimates on a given financial instrument are not too reliable, and when it is low, they can be considered more accurate. First introduced by Pearson, the standard deviation is nothing but the square root of the variance, see Wikipedia for the mathematical formula. The main issue with the standard deviation from a financial use point-of-view, is not so much the

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