Appendix C: Standard Deviation
The standard deviation of a random variable is a measure of the
dispersion of the observations. A larger standard deviation means that the
observations are more dispersed. As an example, the following two
diagrams show the actual observations of two sets of random variables.
The first diagram shows 2000 observations randomly generated from a
normal distribution with a mean of zero and a standard deviation of one.
The second diagram shows a second set of 2000 randomly generated
observations from a normal distribution with a zero mean and a standard
deviation of two. As the diagrams show the observations in the second
graph are more dispersed than in the first.
Standard Deviation = 1
250
--
200
--
150
--
100
--
50
--
0
--
Standard Deviation = 2
140
--
120
--
100
--
80
--
60
--
40
--
20
--
0
--
Bin
25