Historical Volatility

RECENT NEWS
WA Business News  60 min ago  Comment 
Western Australian treasurer Mike Nahan says he can’t guarantee a budget surplus in the next financial year due to the recent volatility in iron ore prices.
The Economic Times  1 hr ago  Comment 
You could expect some short-term volatility in the run up to that. So, active investors should be watching the data carefully.
SeekingAlpha  6 hrs ago  Comment 
By The Brand Value Investor: The Situation Tech stocks are officially back in favor again on Main Street. High flyers and start-ups are becoming the cool thing to talk about at coffee shops. As the market reaches all-time highs on continued...
SeekingAlpha  Sep 22  Comment 
By Dallas Salazar: There are rare occasions in investing when you have to dollar cost average into a position and borderline turn a blind eye to volatility. I'm not saying you completely disregard risk management or make excuses for poor...
TheStreet.com  Sep 22  Comment 
NEW YORK (TheStreet) -- Investors in CarMax stock should sell shares today to avoid a potential downside reaction to earnings after the company reports quarterly results before the opening bell on Tuesday. One reason for concern comes from...
Forbes  Sep 22  Comment 
The stock market’s slow crawl to fresh records in recent sessions included a retreat for the CBOE Volatility Index (VIX). VIX, the market’s “fear gauge,” reflects expectations for future, short-term movement in the broad S&P 500. It’s...
SeekingAlpha  Sep 22  Comment 
By Gary Jakacky: Over the last few years I have examined leveraged index ETFs and reverse ETFs for evidence of volatility drag: that is, the penalty owners of the shares suffer because of the need to rebalance the ETF's portfolio at the start of...
SeekingAlpha  Sep 22  Comment 
By Nathan Buehler: Hello everyone, I enjoy writing my monthly volatility updates. A few readers during the last article took my comments on volatility to mean that I believe the market is all butterflies and rainbows. In my updates I am...
Agrimoney.com  Sep 22  Comment 
Shares in the UK group hit a 20-month low after it reveals a loss at its dairy operations, which will see a further two factories close
The Economic Times  Sep 22  Comment 
Stock and currency markets were taking a breather after one of the most volatile and event-filled weeks in more than a year.




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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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