# Variance

*Risk & Portfolio — Finicade finance glossary*

The average of the squared distances from the mean — standard deviation before you take the square root. It's the natural unit for combining risks, because variances (with covariances) add up cleanly across a portfolio.

**Related terms:** [Standard Deviation](https://finicade.com/glossary/standard-deviation), [Covariance](https://finicade.com/glossary/covariance), [Volatility](https://finicade.com/glossary/volatility)

**Taught in:** Charter Climb — Portfolio Risk & Return

Source: https://finicade.com/glossary/variance