What is the 'Residual Standard Deviation'
The residual standard deviation is a statistical term used to describe the standard deviation of points formed around a linear function, and is an estimate of the accuracy of the dependent variable being measured.
Residual standard deviation is also referred to as the standard deviation of points around a fitted line.
Next Up
BREAKING DOWN 'Residual Standard Deviation'
The residual standard deviation can be calculated when a regression analysis has been performed, as well as an analysis of variance (ANOVA). When determining a limit of quantitation, the use of a residual standard deviation is permissible instead of the standard deviation.
RELATED TERMS

Empirical Rule
A statistical rule stating that for a normal distribution, almost ... 
Standard Deviation
1. A measure of the dispersion of a set of data from its mean. ... 
Standard Error
The standard deviation of the sampling distribution of a statistic. ... 
Downside Deviation
A measure of downside risk that focuses on returns that fall ... 
Residual Income
The amount of income that an individual has after all personal ... 
Appraisal Ratio
A ratio used to measure the quality of a fund's investment picking ...
Related Articles

Markets
Explaining the Empirical Rule
The empirical rule provides a quick estimate of the spread of data in a normal statistical distribution. 
Investing
Explaining Residual Value
Residual value is a measurement of how much a fixed asset is worth at the end of its lease, or at the end of its useful life. 
Managing Wealth
The Uses And Limits Of Volatility
Check out how the assumptions of theoretical risk models compare to actual market performance. 
Trading
Valuing A Company Using The Residual Income Method
Learn the underlying basics behind the residual income model and how it can be used to place an absolute value on a firm. 
Investing
Valuing A Company Using The Residual Income Method
Residual income is the income a company generates after accounting for the true cost of its capital, which is the cost of funds it uses to finance its business. 
Trading
Trading With Gaussian Models Of Statistics
The entire study of statistics originated from Gauss and allowed us to understand markets, prices and probabilities, among other applications. 
Trading
Improve Your Investing With Excel
Excel is a useful tool to assist with investment organization and evaluation. Find out how to use it. 
Trading
A Simplified Approach To Calculating Volatility
Though most investors use standard deviation to determine volatility, there's an easier and more accurate way of doing it. 
Investing
The Linear Regression Of Time and Price
This investment strategy can help investors be successful by identifying price trends while eliminating human bias. 
Trading
How To Convert Value At Risk To Different Time Periods
Volatility is not the only way to measure risk. Learn about the "new science of risk management".
RELATED FAQS

What does standard deviation measure in a portfolio?
Dig deeper into the investment uses of, and mathematical principles behind, standard deviation as a measurement of portfolio ... Read Answer >> 
What is the difference between standard deviation and average deviation?
Understand the basics of standard deviation and average deviation, including how each is calculated and why standard deviation ... Read Answer >> 
What is standard deviation used for in mutual funds?
See how standard deviation is helpful in evaluating a mutual fund's performance. Use it in combination with other measurements ... Read Answer >> 
How is standard deviation used to determine risk?
Understand the basics of calculation and interpretation of standard deviation and how it is used to measure risk in the investment ... Read Answer >> 
How is risk aversion measured in Modern Portfolio Theory (MPT)?
Find out how risk aversion is measured in modern portfolio theory (MPT), how it is reflected in the market and how MPT treats ... Read Answer >> 
What is the difference between standard deviation and mean?
Understand the basics of calculating and interpreting mean and standard deviation and how these mathematical fundamentals ... Read Answer >>