Monday, August 20, 2012

Turn It On Again: Standard Deviation using Stats Worksheet on TI BA II Plus

Last week I taught our CIPM prep classes for the Principles and Expert Levels, and the commonly asked question about the fastest way to do standard deviation came up.

I will take this opportunity to refer to an old blog post (found here) that covered how to this using the statistics worksheet on the TI BA II  Plus calculator - one of the allowable calculators for the CIPM exams and CFA exams.

This post happens to be the most widely read post on my blog, probably because it is of interest beyond the CIPM exams - making it a "greatest hit" of a sort.

The post is useful for calculating:

  • standard deviation of portfolio returns within a composite (internal dispersion)
  • standard deviation of composite returns (external dispersion)
  • tracking error
I caution candidates that I don't recommend you use the statistics worksheet for downside deviation calculations - I don't know of a way to easily deal with the target return (if someone does, please let me know).

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