Math, asked by alick7657, 18 days ago

What is the difference between average and standard deviation?

Answers

Answered by forneus7070

Answer:

Standard deviation is basically used for the variability of data and frequently use to know the volatility of the stock.A mean is basically the average of a set of two or more numbers. Mean is basically the simple average of data.UseStandard deviation is used to measure the volatility of a stock.Mean used to judge the performance of company stock price over a long period of time.Application in financeThe standard deviation has very important in finance, it is used to calculate the annual rate of return on investment over a period of time.Used to calculate the p/e ratio and through mean judge the estimate the fundamental of a company forex balance sheet etc.ApplicationThe standard deviation used in for measuring volatility, so it is used for short-term analysis purposes.Mean is used to measure the average of stock though available fundamental data, so it is used for long term analysis of a stock.StrategiesStandard deviation is often used in creating for trading and investing because it helps to measure the volatility of stock prices and predict the future trend.Mean is absolute deviation used less frequently because the use of absolute value makes the further calculation more complicated and unwieldy than using the sample standard deviationDependencyWe have to calculate the standard deviation with the help of covariance. Standard deviation is nothing but the square root of the variance.We have to calculate the mean with the help of standard deviation.BenchmarkFor measuring the volatility of the fund. We have compared it with the benchmark.For measuring the average of a data. And we have to compare with the historical data of a company.VolatilityStandard deviation measures the volatility of the stock over a certain period of time.

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Mean measure the average of stock by assessing the fundamental attribute of a stock.

Conclusion

Standard deviation vs mean both the tool used for statistical valuation of the stock price, both have their own importance in the field of finance. Big investors and companies apply these terms for the valuation of stock price and future prospectus. Standard deviation is the deviation from the mean, and a standard deviation is nothing but the square root of the variance. Mean is an average of all sets of data available with an investor or company. The standard deviation used for measuring the volatility of a stock. So both Standard Deviation vs Mean plays a vital role in the field of finance. Standard deviation is easier to picture and apply. So both the tool used for strategies which can be used for application in trading and investment activity.