Historical Volatility

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The Volatility Cameo
SeekingAlpha  6 hrs ago  Comment 
Sales are 'inching backwards' in a majority of the country
Clusterstock  Sep 22  Comment 
Existing home sales fell 0.9% at a seasonally adjusted annual rate of 5.33 million in August, according to the National Association of Realtors.  Economists had forecast that sales of existing condos, co-ops, and single-family homes rose by...
Hate Risk? You'll Love These 3 Stocks
Motley Fool  Sep 22  Comment 
These three stocks are about as safe as it gets.
Maruti plans to pay royalty in rupees to skirt a volatile yen
The Economic Times  Sep 22  Comment 
With these moves, Maruti Suzuki hopes to rein its royalty payments to sub-5% range in the coming years. The carmaker's royalty payment to Suzuki has ranged between 5.3% and 6.2%.
Treasuries Close Modestly Higher Following Fed Announcement
newratings.com  Sep 21  Comment 
WASHINGTON (dpa-AFX) - As is typically the case, treasuries saw considerable volatility in reaction to the Federal Reserve's monetary policy announcement on Wednesday. Bond prices bounced back and forth across the unchanged line before...




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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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