Standard deviation basically provides you with a lower and upper range within which, if a value fluctuates is considered to be normal. It has many applications like:
- In production systems, the values are constantly monitored and the standard deviation is used as the upper and lower control limit, anything above or below represents a problem. This technique is called SPC, statistical process control
- In finance, there are various measures used to determine the risks involved in an investment and standard deviation is one of them. The higher the standard deviation, the riskier the investment
- In sports teams are rated in different categories. The teams with a high standard deviation scores shoe that they perform well in some categories but were quite the opposite in the others.
