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 :

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

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**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.**