DEFINITION of 'Semideviation'
A measure of dispersion for the values of a data set falling below the observed mean or target value. Semideviation is the square root of semivariance, which is found by averaging the deviations of observed values that have a result that is less than the mean. The formula for semideviation is as follows:
Where:
n = the total number of observations below the mean
r_{t} = the observed value
average = the mean or target value of a data set
BREAKING DOWN 'Semideviation'
In portfolio theory, semideviation evaluates the fluctuations in returns below the mean. It provides an effective measure of downside risk for a portfolio. It's similar to standard deviation, but it only looks at periods where the portfolio's return was less than the target or average level. This allows investors to see how much loss can be expected from a portfolio, instead of only looking at its expected fluctuations.

Variance
The spread between numbers in a data set, measuring Variance ... 
Standard Deviation
1. A measure of the dispersion of a set of data from its mean. ... 
Downside Risk
An estimation of a security's potential to suffer a decline in ... 
Asset Allocation
An investment strategy that aims to balance risk and reward by ... 
Modern Portfolio Theory  MPT
A theory on how riskaverse investors can construct portfolios ... 
Volatility
1. A statistical measure of the dispersion of returns for a given ...

Options & Futures
An Introduction To Value at Risk (VAR)
Volatility is not the only way to measure risk. Learn about the "new science of risk management". 
Markets
Using Historical Volatility To Gauge Future Risk
Use these calculations to uncover the risk involved in your investments. 
Markets
The Uses And Limits Of Volatility
Check out how the assumptions of theoretical risk models compare to actual market performance. 
Bonds & Fixed Income
Find The Highest Returns With The Sharpe Ratio
Learn how to follow the efficient frontier to increase your chances of successful investing. 
Active Trading Fundamentals
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". 
Active Trading
Modern Portfolio Theory: Why It's Still Hip
See why investors today still follow this old set of principles that reduce risk and increase returns through diversification. 
Fundamental Analysis
Using Decision Trees In Finance
A decision tree provides a comprehensive framework to review the alternative scenarios and consequences a decision may lead to. 
Economics
Understanding Tragedy of the Commons
The tragedy of the commons describes an economic problem in which individuals try to reap the greatest benefits from a given resource. 
Fundamental Analysis
Return on Investment (ROI) Vs. Internal Rate of Return (IRR)
Read about the similarities and differences between an investment's internal rate of return (IRR) and its return on investment (ROI). 
Economics
Current Probability of Donald Trump as President
Predict the current odds of a Donald Trump presidency, and understand the factors that have kept him on top and the looming challenges he faces.

Is Colombia an emerging market economy?
Colombia meets the criteria of an emerging market economy. The South American country has a much lower gross domestic product, ... Read Full Answer >> 
What assumptions are made when conducting a ttest?
The common assumptions made when doing a ttest include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >> 
What are some of the more common types of regressions investors can use?
The most common types of regression an investor can use are linear regressions and multiple linear regressions. Regressions ... Read Full Answer >> 
What types of assets lower portfolio variance?
Assets that have a negative correlation with each other reduce portfolio variance. Variance is one measure of the volatility ... Read Full Answer >> 
When is it better to use systematic over simple random sampling?
Under simple random sampling, a sample of items is chosen randomly from a population, and each item has an equal probability ... Read Full Answer >> 
What are some common financial sampling methods?
There are two areas in finance where sampling is very important: hypothesis testing and auditing. The type of sampling methods ... Read Full Answer >>