Historical Volatility

RECENT NEWS
TheStreet.com  2 hrs ago  Comment 
NEW YORK (TheStreet) --Are you still recovering from last week's stock-market volatility?  It's not over yet, according to one market expert. Stock-market investors should prepare for some bumpy sessions in the next few weeks, according to Brian...
The Economic Times  2 hrs ago  Comment 
Chinese financial regulators encouraged listed firms on Monday to merge, offer cash dividends and buy back shares to support stock markets.
New York Times  4 hrs ago  Comment 
Before reacting to volatile markets, write down a financial plan to make sure your investment goals are aligned.
Benzinga  5 hrs ago  Comment 
After one of the craziest weeks in memory, Wall Street digs in for more volatility as investors revalue the stock market. This mind shift plays out against China's economic struggles and a new guessing game for Federal Reserve interest rate...
Forbes  6 hrs ago  Comment 
Volatility is the price we pay to invest in equity markets. Without risk, there is no potential for reward.
The Economic Times  7 hrs ago  Comment 
Global upheaval leads to a sharp fall. This leads to mass exit by investors, However, as our economy stands strong, there is no need to panic. Let us turn this into an advantage.
SeekingAlpha  8 hrs ago  Comment 
The Australian  6 hrs ago  Comment 
BBC News  Aug 31  Comment 
Chinese shares are lower on fears of further market volatility and ahead of economic data expected to point to a further economic slowdown.




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Volatility refers to the tendency of prices to change unexpectedly, usually as a response to new information or changes in demand for the investment. Volatility can be defined as an investment's tendency to move up and down in price over the latest n periods.

A security with high volatility has bigger fluctuations in price compared to a security with low volatility. The more quickly a price changes up and down, the more volatile it is. As such, volatility is often used as a measure of risk.

For example: A stock whose price went up 10% yesterday and went down 25% today is more volatile than a stock which increased 2% in both days.

Historical volatility is calculated by looking at past changes in stock price. The standard deviation of percentage changes in price is used to calculate observed volatility within the considered timeframe.

Historical Volatility, which looks at the past, is distinct from Implied volatility, which represents expectations about future fluctuations in price and is calculated by looking at the prices of options on the underlying investment.

Volatility is also different from Beta, which is a measure of how the stock price reacts to changes in a broad market index, such as the S&P 500.


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