Variance and Standard Deviation Variance and standard deviation still measure the volatility of returns Using unequal probabilities for the entire range of possibilities Weighted average of squared deviations o2-∑p,(R-E(R2 i=l 55 Variance and Standard Deviation n Variance and standard deviation still measure the volatility of returns n Using unequal probabilities for the entire range of possibilities n Weighted average of squared deviations n i pi Ri E R 1 2 2 σ ( ( ))