Standard deviation measures how far numbers in a data set are spread out from an average value. In investing, it is used as a measurement of portfolio volatility.

Buffett’s 2-Fund portfolio advocates for a 90:10 asset allocation between an S&P 500 Index fund and short-term United States ...

Investors often use standard deviation ... of an entire portfolio, but this formula is far more complex. To keep things simple, we will explain the formula assuming a two-stock portfolio.