How to Calculate Standard Deviation in Microsoft Excel [Easy steps with example] 2023

What Is Standard Deviation?

To determine the standard deviation, a statistical measure that indicates the extent of data dispersion around the mean, we employ the square root of the variance. This method involves assessing the deviation of each data point from the mean and subsequently calculating the square root of the variance. In simpler terms, the standard deviation provides insights into how spread out a dataset is in relation to its average value. The bigger the deviation within the data collection, the further the data points deviate from the mean; hence, the higher the standard deviation, the more dispersed the data. Let’s understand How to calculate standard deviation in Microsoft Excel.

What Does Standard Deviation Measure?

Standard deviation, a crucial metric within the realm of finance, serves as a powerful indicator that illuminates the historical level of volatility associated with an investment when juxtaposed against its annual rate of return.

This metric is derived from the variance between each price point and the mean, showcasing a broader price spectrum. As securities’ standard deviation escalates, the disparities between prices and the mean become more pronounced. Typically, stable blue-chip stocks tend to exhibit lower standard deviations, while volatile stocks frequently manifest high standard deviations.

Why is standard deviation useful in spreadsheets?

The standard deviation can give important information about how concentrated the data are in a spreadsheet. It specifically displays whether or not a dataset’s numbers are dispersed or grouped together. While a high standard deviation indicates that the data points are dispersed throughout a larger range, a low standard deviation indicates that the data points are all closer to the average.

The standard deviation for a dataset can be calculated by calculating the variance’s square root. If you were to complete this task manually, it might take a while, but you can do it fast and effectively by utilizing the formula function in Microsoft Excel.

You can link your dataset to the function formula to compute the standard deviation if it already exists in an Excel spreadsheet. This will save you from having to enter the data again. The function formula will automatically update to reflect the right standard deviation for the updated data if you alter a data point in the spreadsheet. This is a useful method for streamlining the statistical analysis process and managing data in spreadsheets.

How to Calculate Standard Deviation in Microsoft Excel

Excel FunctionUse of FunctionDescription
Excel STDEVA STDEVA(value1, [value2], …) Function to calculate standard deviation of a sample in Excel.
Excel STDEV STDEV(number1,[number2],…) Function to estimates standard deviation based on a sample.
Excel STDEVP STDEVP(number1,[number2],…)Old Excel function to find standard deviation of a population.
Excel STDEV.P STDEV.P(number1,[number2],…) Modern version of the STDEVP function that provides an improved accuracy.
Excel STDEVPA STDEVPA(value1, [value2], …) Calculates Standard Deviation of a population, including text and logical values.
Excel STDEV.S STDEV.S(number1,[number2],…)Calculates the sample standard deviation of a set of values based on the classic sample standard deviation formula.

Calculating standard deviation is easier when using Excel. But first, it’s critical to comprehend Excel’s six standard deviation calculations.

Use the formulas in this category: STDEV.S, STDEVA, and STDEV to determine the sample standard deviation.
Use the formulas in this category: STDEV.P, STDEVPA, and STDEVP to get the standard deviation for a whole population.

Use of 6 standard deviation calculations

Use the following formula to calculate the standard deviation for entire population using data set :

=STDEV.S(B3:B10)

Use the following formula to calculate the standard deviation using data set :

=STDEV.S(B3:B10)
STDEV.S(B3:B10)

When you use the word population, you mean that you are taking into account the total population of datasets. employing a sample of the population (sample standard deviation) will work if employing the complete population is unrealistic or not practicable. Typically, the standard deviation can be determined by calculating the standard deviation using the sample data and then extrapolating that result to the complete population.

These are the three formulas — described focusing on the more typical practice of employing a sample of the data instead of the population:

STDEV.S. This formula will disregard text and logical values because it is only used with numeric data.
STDEVA. When text and logical values are needed to calculate along with numbers, this formula is utilized. TRUE is interpreted as 1, text and “FALSE” as 0, and “text” as 1.
STDEV. Although STDEV.S (which is used in any Excel software released after 2007) performs the same purpose, this formula is compatible with Excel versions 2007 and earlier.
The STDEV.S function is utilized
Again, STDEV.S only considers numerical values and disregards textual and logical values.

The first argument in the formula must be the number 1. The sample’s initial element is represented by the first number. Here, a named range, a single array, or a reference to an array can be used in place of arguments that are separated by commas.
Number 2 is the formula’s optional argument. These could be a reference to a single array, a named range, a single data point, or an array reference. Additional arguments can be used up to 254.

Applications of standard deviation

Standard deviation is a tool used by a wide range of experts to comprehend variance in certain datasets. To better forecast the range of profits they might experience in the future, a marketer might, for instance, compute the standard deviation for the money collected on an advertisement. Standard deviation is frequently used by weather forecasters to describe the margin of error that the general public should anticipate in their predictions.

Standard deviation commonly used by others include:

  • Statisticians
  • Market researchers
  • Insurance analysts
  • College professors
  • Human resource managers
  • Real estate agents

FAQs

What does a standard deviation of 1 mean?

A statistical measure of variance in a population or group is the standard deviation. 68% of the population is within plus or minus the standard deviation from the average when the standard deviation is one. Assume, for instance, that the standard deviation is three inches and that the average male height is 5 feet 9 inches. Following that, 68% of all boys are between 5′ 6″ and 6′, 5’9″ plus or minus 3 inches.

How good of a standard deviation is it?

The data set close to the mean is thought to be good when considering the graphical depiction. When standard deviation is the only calculation taken into account, the coefficient of variance, or CV, whose value depends on CV 1, is regarded as a good standard deviation.

How do you tell if a standard deviation is high or low?

A graphical representation is one of the simplest ways to tell whether the standard deviation is high or low. As previously mentioned, standard deviation calculation is not as challenging as people make out. Even simpler is to represent the standard deviation in a diagram, which aids in determining whether it is large or low. In general, the CV is high if it is greater than 1, and low if it is lower. The standard deviation is divided by the mean to determine the coefficient of variance.

Which is better, high or low standard deviation?

The standard deviation, which is defined above, demonstrates how much the data deviate from the mean. In this, there are primarily two things going on: either the high, which indicates that the data is spread out very far from the mean and is also regarded as unreliable, or the low, which indicates that the data is close to the mean and is regarded as the best or most reliable.

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