how does expected return differ from standard deviation 
expected return and standard deviation are two statistical measures that can be used to analyze a portfolio the expected return of a portfolio is the anticipated amount of returns that a portfolio may generate making it the mean average of the portfolio s possible return distribution standard deviation of a portfolio on the other hand measures the amount that the returns deviate from its mean making it a proxy for the portfolio s risk the bottom lineexpected return is an estimate of the average return that an investment or portfolio investments should generate over a certain period of time in general riskier assets or securities demand a higher expected return to compensate for the additional risk expected return is not a guarantee but rather a prediction based on historical data and other relevant factors it can be used by investors to compare different investment options and make informed decisions about their portfolios and is a key input for various financial models such as modern portfolio theory mpt and the capital asset pricing model capm 