Rebekah likes to manage her own investments and is interested in the mathematics behind performance and risk measurement. Risk can be measured using a statistic called ‘standard deviation’ which is calculated from price data for the past few years (usually three or five). If standard deviation is small, then the future return from an investment is likely to be within a narrow range, so risk is low. If the standard deviation is high, future returns could be in a much wider range and so the risk is high. Rebekah thinks she has found two investments that are completely uncorrelated. One has a risk level (standard deviation) of 10 and the other of 8. She can work out that if she combines them in a portfolio, putting half her money in each of the investments, the risk level will be 6.4. In other words, combining the two investments produces a portfolio that has lower risk than either of the investments independently.