![]() It helps to allocate portfolios based on the volatility of stocks. Sometimes, Standard Deviation may provide misleading information, due to unexpected developments regarding the company. Standard Deviation does not identify the trend or direction, but reveals the price movement based on the historical data. Standard Deviation can assist in determining the target price of a security. As such, deviation is a key aspect of fundamental analysis, which determines risks involved in various stocks, funds, and other assists. When it comes to choosing a risky investment, market participants opt for stocks with higher standard deviation that provides volatility, which can be used for quick profits. Generally, blue-chip / large-cap stocks have a lower Standard Deviation compared to illiquid or small-cap stocks.
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