What is the risk measure for the volatility of an international portfolio?

The volatility of an international portfolio is primarily measured by standard deviation. Standard deviation quantifies the amount of variation or dispersion in a set of values, thereby providing insight into how much the returns on the portfolio can deviate from the expected return. A higher standard deviation indicates greater volatility, meaning that the portfolio's returns can swing widely in either direction, which is particularly important for investors managing international portfolios due to the varying economic conditions, exchange rates, and market dynamics in different countries.

In the context of portfolio management, understanding volatility is crucial for assessing risk. Investors use standard deviation to evaluate the risk-return profile of their investments. This measure aids in forming an overall understanding of the portfolio's risk exposure in international markets, where factors such as geopolitical instability, currency fluctuations, and varying market regulations can further complicate the stability of investment returns. The standard deviation thus serves as a fundamental tool in risk assessment, particularly pertinent to international portfolios.