What does standard deviation measure?

Standard deviation is a statistical measurement that quantifies the amount of variation or dispersion within a set of values. Specifically, it indicates how much individual data points differ from the mean (average) of the dataset. A low standard deviation suggests that the values tend to be close to the mean, indicating less variability, while a high standard deviation indicates that the values are spread out over a wider range, illustrating greater variability.

This measure is essential in understanding the distribution of data, particularly in fields like business and social sciences, where it can help assess risks or variability in financial returns, survey data, and more. By providing insight into how data is spread, standard deviation allows analysts to make more informed decisions based on the characteristics of the dataset.