Standard deviation measures how much an investment's returns vary from its average. Nifty 50 has ~18% std dev. Lower = more predictable.
What is a good Sharpe Ratio?
Above 1.0 is good, above 2.0 is excellent. It measures return earned per unit of risk. Most diversified Indian portfolios target 0.8–1.5.
How does diversification reduce portfolio volatility?
Assets with low or negative correlation partially offset each other's swings. Adding debt funds and gold significantly reduces portfolio-level standard deviation.
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