Historical Volatility

RECENT NEWS
Benzinga  1 hr ago  Comment 
Lululemon Athletica inc. (NASDAQ: LULU) shares are trading higher by $1.22 at $69.36 in Wednesday's session. The issue has been holding well considering it reported a Q1 miss of a penny with a slight beat for revenues. Also, the company offered...
Motley Fool  7 hrs ago  Comment 
Tracking the payment processor's growing revenue and customer base.
The Economic Times  9 hrs ago  Comment 
The stock has been very volatile of late. It has recently breach its 200-day moving averages, which is a positive trend. At 69.6, the 14-day RSI index hints that the stock is close to overbought zone.
The Economic Times  11 hrs ago  Comment 
The margin trajectory remains uncertain. High volatility is likely to continue in FY2017.
The Economic Times  Jun 8  Comment 
The British pound was off Monday's three-week low but remained volatile. It traded at $1.4541, compared with Monday's low of $1.4352.
TechCrunch  Jun 7  Comment 
 Most entrepreneurs focus on the hard economics of the deal when they negotiate with investors: percentage ownership, valuation, preferences and other terms. Those things are all important — but so is the soft stuff, especially in today’s...
Wall Street Journal  Jun 7  Comment 
The British pound soared by more than 1% against the dollar early Tuesday, with a suspected “fat-finger” trade highlighting investors’ nerves ahead of the U.K.’s referendum on its EU membership.
New York Times  Jun 7  Comment 
Though Donald J. Trump has hired veteran strategists to win over a broader base of voters, they may be thwarted by their candidate’s volatility.
MarketWatch  Jun 7  Comment 
A U.K. exit from the European Union may be the necessary evil to save the future of the political bloc, even if it comes at the expense of short-term volatility, according to former Pimco executive Mohamed El-Erian.
MarketWatch  Jun 7  Comment 
A brief spike for the British pound overnight was blamed on a ‘fat finger’ by some, but others say watch for volatility as U.K. referendum draws near.




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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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