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

Pooled standard deviation is a useful tool when analyzing data sets. It is especially helpful when you’ve taken the time to properly weigh your standard deviations so everything is in balance.

Calculate the standard deviation of the historical returns compared to the mean determined in Step 3. In Excel, this can be achieved by using the STDEV function.