where does standard deviation fit in 
most portfolio analysts focus on the standard deviation of the portfolio as a whole to get the best picture of the range of outcomes in the portfolio standard deviation is the square root of the variance and provides a more realistic look at the level of risk of the portfolio the higher the standard deviation the more volatile a portfolio is likely to be and vice versa the bottom linevariance is a statistical measure of the volatility or risk of a portfolio and the individual securities in it variance itself is not the main number to pay attention to but rather its standard deviation which is the square root of a portfolio s variance the higher the standard deviation the more risk the portfolio is carrying while the opposite is true for a low standard deviation standard deviation is in turn a factor of the variance and correlation of the securities in a portfolio if the standard deviation is deemed too high or risky the portfolio manager can adjust their holdings to incorporate lower correlation assets in the portfolio and potentially lower the standard deviation or risk of the portfolio 