Historical Volatility

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The Hindu Business Line  2 hrs ago  Comment 
The currency may remain volatile in the 64-65 range as Brexit talks begin
Clusterstock  4 hrs ago  Comment 
In a stock market devoid of big price swings, you can only bet on low volatility for so long. At a certain point, there are diminishing returns to that approach because measures of volatility can only get so low. Not to mention the investment...
The Economic Times  11 hrs ago  Comment 
The yuan is firm today, but going forward, much depends on the performance of the US dollar, says a trader at Chinese bank.
The Hindu Business Line  Jun 18  Comment 
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New York Times  Jun 17  Comment 
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This hybrid mutual fund has generated consistent returns across cycles




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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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