Standard Deviation shows how much variation or dispersion exists from the average (mean, or expected value). A low standard deviation indicates that the data points tend to be very close to the mean, whereas a high standard deviation indicates that the data points are spread out over a large range of values.
The Standard Deviation is calculated as follows:
- Calculate the Average Close price for the Period
- Determine each period's deviation (Close less Average Close)
- Calculate the square of each Period's deviation
- Sum up all the squared deviations
- Divide this sum by the Period
- Take the square root of this as the standard deviation.