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While the original focus of Modern Portfolio Theory was on portfolio
variance, the community of practitioners has been more comfortable
with standard deviation.

Beginner

Portfolio variance is a measure of the riskiness of a portfolio. It can be measured using returns-based analysis by squaring the differences from the average return and dividing by the number of observations. It can also be measured using holdings-based analysis by taking the sum of the weights squared times each cell of the covariance matrix.

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False

**Eve: ***And finally, take the square-root of
*portfolio variance *.*

**Liz: ***Yes, and don't forget to do the same to
units of returns-squared.*

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Keywords:

portfolio variance

dispersion

risk measure

stock portfolio

covariance matrix

returns-based

holdings-based

portfolio performance

risk modeling

financial modeling

performance attribution