First, let's look at what a standard deviation is measuring. Consider two small businesses with four employees each. In one business, two employees make $19 an hour and the other two make $21.

Were that to occur, the standard-deviation calculation would be unfair, because it would penalize fund managers for excelling at their jobs. If a fund gains 7% when the stock market rises by 5% ...

Standard deviation is a measure of how far away individual measurements tend to be from the mean value of a data set. The standard deviation of company A's employees is 1, while the standard ...

— -- Q: Why is standard deviation used by some investors to measure risk? A: Measuring risk can be a pretty straight-forward exercise. When it comes to figuring the odds of an accident while ...

If Mutual Fund B also has an average annual return of 10% but a standard deviation of 15%, you would expect about 68% of the time for the return to be between -5% and 25%.

The standard deviation of $1,000 tells you that about two-thirds of your monthly paychecks will fall within $4,000 to $6,000 ($5,000 ± $1,000). But some months will fall outside this range.