How do you interpret standard deviation in statistics?

How do you interpret standard deviation in statistics?

More precisely, it is a measure of the average distance between the values of the data in the set and the mean. A low standard deviation indicates that the data points tend to be very close to the mean; a high standard deviation indicates that the data points are spread out over a large range of values.

Is higher standard deviation riskier?

The riskier the security, the greater potential it has for payout. The higher the standard deviation, the riskier the investment. In a normal distribution, individual values fall within one standard deviation of the mean, above or below, 68% of the time. Values are within two standard deviations 95% of the time.

What does a standard deviation of 2 mean?

Specifically, if a set of data is normally (randomly, for our purposes) distributed about its mean, then about 2/3 of the data values will lie within 1 standard deviation of the mean value, and about 95/100 of the data values will lie within 2 standard deviations of the mean value. …

What does Standard Deviation tell you about test scores?

Standard deviation tells you, on average, how far off most people’s scores were from the average (or mean) score. The SAT standard deviation is 211 points, which means that most people scored within 211 points of the mean score on either side (either above or below it).