mattie_shoes
Flat vs rising stock standard deviations
The dark line is the same standard deviation of stock prices using the prediction that the stock price will not change. The yellow line is the prediction that the stock price will rise as shown in the previous graph. As one can see, the standard deviation is less for stock prices rising. So assuming a stock price will rise is a better prediction than assuming it will stay the same. I'm a bit disappointed -- I had hoped the standard deviation would drop more significantly. And of course, this doesn't really help us pick stocks since it's making the same prediction for every stock, every day, but baby steps!
Flat vs rising stock standard deviations
The dark line is the same standard deviation of stock prices using the prediction that the stock price will not change. The yellow line is the prediction that the stock price will rise as shown in the previous graph. As one can see, the standard deviation is less for stock prices rising. So assuming a stock price will rise is a better prediction than assuming it will stay the same. I'm a bit disappointed -- I had hoped the standard deviation would drop more significantly. And of course, this doesn't really help us pick stocks since it's making the same prediction for every stock, every day, but baby steps!