Historical Volatility

The Hindu Business Line  5 hrs ago  Comment 
H-1B issue, demand outlook and currency volatility may play spoilsport in the quarter
Wall Street Journal  11 hrs ago  Comment 
Faced with years of volatile crop prices, some U.S. farmers are coming up with unique ways—including converting grain into booze and flour—to wring money from their crops.
Financial Times  Jan 8  Comment 
Activists’ volatile response creates uncertainty for Beijing
The Hindu Business Line  Jan 8  Comment 
As we set foot in 2017, one point everyone agrees on is that this is going to be an extremely difficult year for the equity market. The uncertainty arising from significant global events such as Dona...
The Economic Times  Jan 8  Comment 
Various industry players and sectoral experts cite taxation issue as the most teething concern coupled with the impact on solvency, determining free reserves and the fair value accounting which can create volatility.
The Economic Times  Jan 8  Comment 
Market participants should not be surprised if the next one month remains volatile, as it will be marred by constant domestic news flows.
Reuters  Jan 6  Comment 
Donald Trump's threat to impose a fee on Toyota Motor in a tweet Thursday made the automaker the latest in a series of companies targeted by the U.S. president-elect. Some of the companies have seen volatile price spikes in their shares after the...


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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