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STDEV Function

Estimates the standard deviation based on a sample

What is the STDEV Function?

The STDEV Function is categorized under Statistical functions. The function will estimate the standard deviation based on a sample.

As a financial analyst, STDEV can be useful in using the annual rate of return on an investment to measure its volatility. If a stock is volatile, it will show a high standard deviation while a stable blue-chip stock will show a lower standard deviation.

 

Formula

=STDEV(number1,[number2],…)

 

The STDEV function uses the following arguments:

  1. Number1 (required argument) – It is the first number argument that corresponds to a sample of a population.
  2. Number2 (optional argument) – It is a number argument that corresponds to a sample of a population.

 

Notes

  1. The given arguments must provide at least two numeric values to the function.
  2. The arguments should be between 1 and 255 numeric values, arrays of values, or references to cells containing numbers.
  3. Arguments can either be numbers or names, arrays, or references that contain numbers.
  4. The function is used when we want to calculate the standard deviation for a sample of a population. If we are calculating the standard deviation of an entire population, we need to use the STDEVP function or the STDEV.P function.

 

How to use the STDEV Function in Excel?

As a worksheet function, STDEV can be entered as part of a formula in a cell of a worksheet. To understand the uses of the function, let us consider an example:

 

Example

Suppose we are given the test scores of students below:

 

STDEV Function

 

For the standard deviation, the formula used is:

 

STDEV Function - Example 1

 

We get the results below:

 

STDEV Function - Example 1a

 

The equation used is:

 

STDEV Function - Formula

 

Where:

  • takes on each value in the set
  • is the average (statistical mean) of the set of values
  • is the number of values

 

Things to remember about the STDEV Function: 

  1. #DIV/0! error – Occurs if less than two numeric values are provided to the STDEV function.
  2. #VALUE error – Occurs if any of the given values provided directly to the STDEV function are text values that cannot be interpreted as numeric values.
  3. In MS Excel 2010, the STDEV function is replaced by the STDEV.S function. However, the STDEV function is still available in MS Excel 2010 and is stored in the list of compatibility functions to allow compatibility with earlier versions of MS Excel.

 

Click here to download the sample Excel file

 

Additional resources

Thanks for reading CFI’s guide to important Excel functions! By taking the time to learn and master these functions, you’ll significantly improve your financial modeling in Excel. To learn more, check out these additional resources:

  • Excel Functions for Finance
  • All Excel Functions
  • Financial Modeling Best Practices
  • Financial Analyst Certification

Free Excel Tutorial

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