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Standard Deviation and Risk

EasyStatistics & Probability00:00
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Your question is Standard Deviation and Risk. Take a moment with it on the right.

Talk me through your thinking if you like. When you're confident, submit your answer and I'll grade it like a real screen (7/10 or better passes).

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Problem

Explain the concept of standard deviation and how it is used to measure portfolio risk.

Keep the answer focused on returns, volatility, and what a higher or lower standard deviation implies for a portfolio. Define the metric, show how it is calculated from a small set of returns, and explain why risk teams use it as a proxy for uncertainty.