Portfolio variance is calculated using the standard deviation of each security in the portfolio and the correlation between securities in the portfolio.

Understanding standard deviation means first understanding variance because standard deviation, mathematically speaking, is the square root of variance.

Learn the standard deviation formula, how to calculate it, and its importance in data analysis. Step-by-step guide with examples.

Modern Portfolio Theory (MPT) looks at how risk-averse investors can build portfolios to maximize expected returns based on a given level of risk.

The standard deviation is the square root of the variance. Unfortunately, according to mathematical theory, you can’t do arithmetic operations with standard deviations, although you can with ...