📥 Master Standard Deviation with Hands-On Practice
Want to get the most out of this guide? Download the free practice workbook 👉 HERE and follow along step by step.
What Does Standard Deviation Mean?
Standard deviation shows how far your numbers are from the average.
It helps answer the question: “Are my numbers consistent, or do they vary a lot?”
Here’s an example:
- Low Standard Deviation:
If you study for 5, 6, 5, 6, and 5 hours each week, the numbers are close to the average. This means your study time is consistent, so the standard deviation is low. - High Standard Deviation:
If you study for 3, 9, 2, 12, and 5 hours, the numbers are all over the place. This means your study time varies a lot, so the standard deviation is high.
Why Do We Use Standard Deviation?
1. Spot Trends and Patterns
Standard deviation tells you how consistent your data is. For example, in sales data, low variability might mean consistent customer demand.
2. Make Better Decisions
In finance, investors use standard deviation to measure risk. A high standard deviation means a stock’s price fluctuates a lot.
3. Compare Results
Teachers can use it to analyze test scores. A low standard deviation means most students scored similarly.
Formula for Standard Deviation (Simplified)
The formula looks like this:
σ = √(Σ(xᵢ - μ)² / N)Here’s what each part means:
- σ (sigma): Standard deviation symbol.
- xᵢ: Each number in your dataset.
- μ (mu): The average of your numbers.
- N: Total number of data points.
What Does This Formula Mean?
In simple terms, standard deviation is calculated by:
- Comparing each data point to the average (mean).
- Squaring these differences to remove negatives.
- Averaging the squared differences.
- Taking the square root of this value to bring it back to the same unit as the data.
This process helps measure how far your data points are from the mean, showing how consistent or spread out your data is.
This might seem complex, but here’s the good news: you don’t need to calculate it manually. Excel does all the math for you with a single formula!
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Sample vs Population in Standard Deviation
When using standard deviation in Excel, you’ll choose between these two formulas:
- STDEV.S: Use this when you’re working with a sample of data.
- STDEV.P: Use this when you have data for the entire population.
What’s a Sample vs. Population?
- Sample: A smaller group selected from a larger set. Example: You survey 50 customers out of 1,000.
- Population: The complete dataset. Example: You have sales data for all 1,000 customers.
Why is STDEV.S More Common?
Most of the time, you only have access to a sample of the data. It’s rare to have information for an entire population, which is why STDEV.S is the default choice.
How to Calculate Standard Deviation in Excel
Let’s calculate the standard deviation using a real-life example. We’ll compare the sales results of two marketing campaigns, A and B.
Each number shows how much money was earned for every $1 spent on ads.
Step 1: Download the Practice File
Click here to download the practice file to follow along.
Step 2: Find Standard Deviation in Excel
Click on an empty cell where you want the result:
- For Campaign A, type:
=STDEV.S(B3:B6)
- For Campaign B, type:
=STDEV.S(D3:D6)Excel calculates the standard deviation as:
- Campaign A: 0.18
- Campaign B: 2.09
Step 3: Calculate the Average (Mean)
For comparison, we’ll also calculate the average (mean) of the dataset. We’ll use the Excel Average formula:
- Click on an empty cell below the Campaign A data.
- Use the AVERAGE function in Excel and press Enter.
=AVERAGE(B3:B6)
- Repeat the same steps for Campaign B by typing:
=AVERAGE(D3:D6)What Do the Results Mean?
If you only look at the averages, you might assume both campaigns perform the same. But their standard deviations reveal a very different story:
- Campaign A:
- Sales are consistent. Most ads generate sales close to the average ($2.00).
- This campaign offers stability and predictable results
- Campaign B:
- Sales are highly variable. Some ads perform exceptionally well ($4.40), while others underperform ($0.20).
- Campaign B is riskier but has the potential for big wins.
💡 The standard deviation is measured in the same unit as your data. This makes it easier to understand and interpret.
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How to Insert the Standard Deviation Symbol
- Click on the cell where you want to insert the standard deviation symbol.
- Hold down the Alt key on your keyboard.
- While holding Alt, type 229 on the numeric keypad (make sure Num Lock is on).
- Release the Alt key, and the standard deviation symbol (σ) will appear.
Variance vs Standard Deviation
Understanding the difference between variance and standard deviation can help you analyze data more effectively.
Both measure how spread out your data is, but they do it in different ways.
What is Variance?
Variance tells you the average squared difference between each data point and the mean. In simple terms, it shows how far your numbers are from the average overall.
- Units: Variance is measured in squared units. For example, if your data is in dollars, variance will be in square dollars, which can make it harder to interpret.
What is Standard Deviation?
Standard deviation is the square root of variance. It tells you the spread of your data in the same units as your original numbers.
- Units: If your data is in dollars, the standard deviation will also be in dollars. This makes it much easier to understand and apply in real-life decisions.
Standard Error vs. Standard Deviation
Understanding the difference between standard error and standard deviation can help you analyze data more effectively. While they seem similar, they have different uses. Here’s what you need to know:
What is Standard Error?
Standard error shows how accurate your sample mean is as an estimate of the population mean. It tells you how much your sample averages are likely to vary if you repeated the study.
- Smaller Standard Error: Your sample mean is closer to the true population mean.
- Larger Standard Error: Your sample mean may be less accurate.
Key Differences Standard Error vs Standard Deviation
| Standard Deviation | Standard Error |
| Measures variability in a dataset. | Measures accuracy of the sample mean. |
| Describes the spread of individual data points. | Describes the spread of sample means. |
| Stays the same regardless of sample size. | Gets smaller as the sample size increases. |
Download the Free Practice File
Ready to learn how to calculate standard deviation in Excel? Download our free practice workbook to follow along with the steps in this guide. Here’s what you’ll get:
- Hands-On Tasks: Practice calculating standard deviation and average using formulas.
- Real-Life Scenarios: Learn how to find and interpret standard deviation, just like in real-world projects.
- Time-Saving Tips: Discover shortcuts and tricks that make merging columns fast and easy.
📥 Download the Workbook Now to start improving your Excel skills today! Perfect for beginners and experienced users alike.
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Leila Gharani
I’ve spent over 20 years helping businesses use data to improve their results. I've worked as an economist and a consultant. I spent 12 years in corporate roles across finance, operations, and IT—managing SAP and Oracle projects.
As a 7-time Microsoft MVP, I have deep knowledge of tools like Excel and Power BI.
I love making complex tech topics easy to understand. There’s nothing better than helping someone realize they can do it themselves. I’m always learning new things too and finding better ways to help others succeed.
