Mean and Standard Deviation Solution Strictly Confidential

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Mean and Standard Deviation Solution
The standard deviation of a stock's return is often used as a measure of risk.
The more volatile, or risky, the returns, the larger the variation in closing prices.
For the following two stocks, calculate their mean return and standard deviation and determine which stock is "riski

American Airlines (AMR)

Day Returns Mean x-mean x-mean squared
1 3.13% 1.08% 2.05% 0.04%
2 2.11% 1.08% 1.04% 0.01%
3 -1.83% 1.08% -2.90% 0.08%
4 2.11% 1.08% 1.03% 0.01%
5 4.88% 1.08% 3.80% 0.14%
6 -2.27% 1.08% -3.35% 0.11%
7 2.67% 1.08% 1.59% 0.03%
8 -5.14% 1.08% -6.21% 0.39%
9 2.74% 1.08% 1.66% 0.03%
10 -5.55% 1.08% -6.63% 0.44%
11 7.16% 1.08% 6.08% 0.37%
12 2.10% 1.08% 1.03% 0.01%
13 7.51% 1.08% 6.44% 0.41%
14 4.02% 1.08% 2.94% 0.09%
15 -0.81% 1.08% -1.89% 0.04%
16 -1.41% 1.08% -2.49% 0.06%
17 -2.03% 1.08% -3.11% 0.10%
18 6.10% 1.08% 5.02% 0.25%
19 0.68% 1.08% -0.40% 0.00%
20 -4.63% 1.08% -5.70% 0.33%
2.94%
Variance 0.15%
Mean 1.08% Standard Deviation 3.93%

Using AVERAGE 1.08% Using STDEV 3.93%

Based on the standard deviation of returns, AMR is riskier than WMT.

and determine which stock is "riskier" based on it's return volatilty.

Wal-Mart (WMT)
Day Returns Mean x-mean x-mean squared
1 0.24% -0.12% 0.35% 0.00%
2 0.84% -0.12% 0.96% 0.01%
3 -0.46% -0.12% -0.34% 0.00%
4 1.12% -0.12% 1.24% 0.02%
5 1.52% -0.12% 1.64% 0.03%
6 -0.44% -0.12% -0.32% 0.00%
7 -0.10% -0.12% 0.02% 0.00%
8 -2.14% -0.12% -2.02% 0.04%
9 -0.57% -0.12% -0.45% 0.00%
10 0.47% -0.12% 0.59% 0.00%
11 -1.73% -0.12% -1.61% 0.03%
12 0.20% -0.12% 0.32% 0.00%
13 -0.60% -0.12% -0.48% 0.00%
14 -0.04% -0.12% 0.08% 0.00%
15 0.11% -0.12% 0.23% 0.00%
16 -1.03% -0.12% -0.91% 0.01%
17 -1.04% -0.12% -0.92% 0.01%
18 0.65% -0.12% 0.77% 0.01%
19 -0.22% -0.12% -0.10% 0.00%
20 0.83% -0.12% 0.95% 0.01%
0.16%
Variance 0.01%
Mean -0.12% Standard Deviation 0.92%

Using AVERAGE -0.12% Using STDEV 0.92%