Category standard deviation

Category standard deviation, as the name states, is the average of standard deviation of all the funds in a particular category.

For eg : Let’s assume there are 5 funds in the small cap category :

Fund Std Dev
A 15%
B 17.5%
C 20%
D 22.5%
E 25%

This makes the category Standard deviation : (15%+17.5%+20%+22.5%+25%)/5 = 20%

We can use the Category standard deviation to compare individual funds to the average to see where the fund stands in terms of volatility in its category.