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Why Variance is Used as a Risk Measure Risk, Markowitz reasoned, could be thought of as the variability of returns: what statisticians call their "standard deviation," or the square of that standard deviation, their "variance." Asked by me why he had conceived of risk in this way, Markowitz simply cited how often he had come across the concept of standard deviation in the statistics courses he had taken. Donald MacKenzie -- An Engine, Not A Camera |