Historical Volatility

RECENT NEWS
When volatility knocks: what to watch for
Financial Times  6 hrs ago  Comment 
A rate shock is among three big events that could end the current bout of low volatility, so watch out for dollar strength, which could be the lead indicator
Emerging Market Debt: A Strong Play For Your Portfolio
SeekingAlpha  11 hrs ago  Comment 
By Eamon Trebilcock: How Risky are EM? Two words used almost synonymously are: emerging markets and volatility. In order to invest in emerging markets, one must carefully evaluate investment decisions and asset allocations. One familiar with...
Stock markets may see volatile trading amid derivatives expiry
The Economic Times  Jul 27  Comment 
Investors will also watch progress of monsoon, investment trend by overseas investors, oil price and movement of rupee against the dollar.
Is the Housing Market Cooling or Maintaining Its Volatility
TheStreet.com  Jul 25  Comment 
NEW YORK (TheStreet) -- As of June, new-home sales dropped by 8% to an annual rate of 406,000 homes. Does this mean the housing market is cooling down? How does this news impact homebuilder stocks such as D.R. Horton and Lennar ? The chart...
What Gives American Public Education Hope, But Why It Will Remain Volatile For Some Time
SeekingAlpha  Jul 25  Comment 
By Gary Bourgeault: The for-profit segment of the educational market continue to be volatile, and American Public Education (NASDAQ:APEI) has experienced those same conditions; although it has stabilized since its plunge at the end of February...
Wall Street's Brightest Minds Reveal The Most Important Charts In The World
Clusterstock  Jul 25  Comment 
This is it: the most important charts in the world. We asked dozens of our favorite analysts, economists, strategists, and portfolio managers on Wall Street and around the world to send us their most important charts. And the picture these...




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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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