Instruction on calculating Standard

Deviation in Excel

Standard Deviation Formula

Standard Deviation:

= ProbabilityE( R )= Expected Return= Variance= Standard Deviation

1. Copy the data to excel

2. Calculate the Expected Return

To calculate the Expected Return, the return column should get multiplied by probability column:

a) Select a cell in excelb) Enter the = sign in the cellc) Select return cell, the * sign and

then select the probability celld) Press Enter

Now we need the same formula for the rest of the cells, to do that we are going to drag:e) Place your mouse in the lower right

corner of the cell (in this case D3), once you see the filled in plus sign, left click and drag down

2. Calculate the Expected Return Cont.

The next step in calculating the expected return is to add all the values in column “Return*Prop” a) Select a cell in excelb) Enter the = sign in the cellc) Type in SUMd) Double click on the formula and select the

datae) Close parenthesis f) Press Enter

3. Find the R – E( R ) a) On the next column near the data

b) Enter the equal signc) Select the first return d) Enter the minus signe) Select the expected returnf) Enter

3. Continuea) Next we want to copy the formula for

the rest of the rows. To do this we need to make the expected return cell fixedi. For that select the cellii. Click next to the cell number

(that contains the expected return) which in this example is D8

iii. Add $ next to cell column and row. i.e. $D$8

3. Continuea) Now place your mouse in the

lower right corner of the cell, once you see the filled in plus sign, left click and drag down

4. [R – E( R )]^2a) Go to the next column

on the first row

b) Enter the equal signc) Select the R - ER cell, in

this example E3d) Then Shift + 6 ( to add

^ sign)e) The number 2f) Enter

4. Continuea) Now we need the same formula for

all the other values. So place your mouse in the lower right corner of the cell, once you see the filled in plus sign, left click and drag down

5. P * [R – E( R )]^2a) Select a cell in excelb) Enter the = sign in the cellc) Select probability cell, the * sign and then

select the [R – E( R )]^2 celld) Press Enter

5. Cont.Now we need the same formula for the rest of the cells:a) Place your mouse in the lower

right corner of the cell once you see the filled in plus sign, left click and drag down

6. Sum P*[R – E( R )]^2

a) Select a cellb) Enter the equal signc) Enter the word SUMd) Double click on the formulae) Select the dataf) Enter

7. Take square rootThis is the last step. We need to take the square root of the number we found in part 6. To do that follow the following steps:a) Enter the equal sign into a cellb) Then type SQRT and select

Excel's formulac) Select the cell from step 6d) Enter