Bell curve

The graphical representation of a traditional probability distribution, whose underlying standard deviations from the mean form the curved curve, is noted as having a “bell curve.” The variability of knowledge dispersion, during a set of provided values round the mean, is measured employing a variance. the best point on the bell curve is that the mean, which is that the average of all the information points within the data set or sequence.

When examining the returns on a security or the overall sensitivity of the market, financial analysts and investors frequently employ a standard probability distribution. The term “volatility” in finance refers to straightforward deviations that represent the returns of a security.

For instance, stocks with a bell curve are typically blue-chip stocks with lower volatility and more consistent behavioural tendencies. Investors base their expectations for future returns on the traditional probability distribution of a stock’s historical performance.