Overview
Standard Deviation is the square root of the variance. It is the most widely used measure of spread because it is expressed in the same units as the original data, making it more intuitive to interpret.
Key Properties
- Empirical Rule (68-95-99.7): In a normal distribution, approximately 68% of data falls within 1 SD of the mean, 95% within 2 SDs, and 99.7% within 3 SDs.
- Volatility: In finance, standard deviation is often used as a measure of risk or volatility.
Use Cases
- Quality control in manufacturing.
- Measuring investment risk.
- Standardizing test scores.