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


For example : 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.