Volatility

Volatility is the range of returns for a security or market index.

Volatility is one of the most complex terms with many different meanings, uses, and implications.

It may occur to you that speed is also volatility. Historical volatility can be thought of as the speed (rate of change) of the price of stock, ETF, bond, commodity, or currency.

Historical volatility is commonly measured with standard deviation and viewed as a bell curve. When it is, volatility is how fast the curve spreads out. That is, a low volatility data set has more data gathered in the center while a high volatility set of data spreads out so it has a wider bell curve to reflect the wider range of data.

 

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