What is the Z-Score?

The Z-score  is a statistical measurement of one variables relationship to the mean (average) of a group of values. More specifcally, the Z-score states the number of standard deviations a variable lies from the mean of the group of values. 

What Does a Z Score Show?

A zero Z-score indicates that the mean of the group and the value being tested is identical. 

A one or negative one Z-score indicates that the value is one standard deviation from the mean. 

A positive one indicates that it is one standard deviation above, while a negative one indicates that it is one standard deviation below the mean. 

How is the Z Score Used?

Z-scores are measures of an observation’s variability and can be put to use by traders in determining market volatility.