The one - year standard deviation is, 10.45%.
what is standard deviation?
The standard deviation in statistics is a measurement of how much a set of values can vary or be dispersed. A low standard deviation suggests that values are typically close to the set's mean, whereas a high standard deviation suggests that values are dispersed over a wider range.
Given:
A portfolio has a 3-year standard deviation of 18.1%.
We have to find the one - year standard deviation.
One - year SD = Variance / number of years.
Here,
Variance = square of standard deviation = (18.1)^2 = 327.61
So,
One - year SD = 327.61 / (3/1)
One - year SD = 109.20
Now,
(109.2)^(1/2) = 10.45%
Hence, the one - year standard deviation is, 10.45%.
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