Understanding and Importance of Sigma in Investing
In investing, sigma refers to the standard deviation of returns on an investment. It is a statistical measure that quantifies the amount of variation or dispersion of a set of data points. Here's a breakdown of how sigma is evaluated, its importance, and what it signifies: How Sigma is Evaluated Collect Historical Returns: Compile historical return data for the investment over a specific period (e.g., daily, monthly, yearly returns). Calculate the Mean Return: Find the…