DEFINITION of 'Historical Volatility  HV'
The realized volatility of a financial instrument over a given time period. Generally, this measure is calculated by determining the average deviation from the average price of a financial instrument in the given time period. Standard deviation is the most common but not the only way to calculate historical volatility.
Also known as "statistical volatility."
INVESTOPEDIA EXPLAINS 'Historical Volatility  HV'
This measure is frequently compared with implied volatility to determine if options prices are over or undervalued. Historical volatility is also used in all types of risk valuations. Stocks with a high historical volatility usually require a higher risk tolerance.
RELATED TERMS

Variance
The spread between numbers in a data set, measuring Variance ... 
Volatility Arbitrage
Trading strategies that attempt to exploit differences between ... 
Historical Returns
The past performance of a security or index. Analysts review ... 
Implied Volatility  IV
The estimated volatility of a security's price. In general, implied ... 
Value At Risk  VaR
A statistical technique used to measure and quantify the level ... 
Beta
A measure of the volatility, or systematic risk, of a security ...
RELATED FAQS

Can delta be used to calculate price volatility of an option?
The delta of an option is a component of the BlackScholes option pricing formula, which provides the implied volatility ... Read Full Answer >> 
What is an option's implied volatility and how is it calculated?
Implied volatility is a parameter part of an option pricing model, such as the BlackScholes model, that gives the market ... Read Full Answer >> 
How can you calculate volatility in Excel?
Though there are several ways to measure the volatility of a given security, analysts typically look to the historical volatility. ... Read Full Answer >> 
What is the best measure of a given stock's volatility?
When selecting a security for investment, traders look at its historical volatility to help determine the relative risk of ... Read Full Answer >> 
What are some examples of ways that sensitivity analysis can be used?
Sensitivity analysis is an analysis method that is used to identify how much variations in the input values for a given variable ... Read Full Answer >> 
What is the difference between an optionadjusted spread and a Zspread in reference ...
Unlike the Zspread calculation, the optionadjusted spread takes into account how the embedded option in a bond can change ... Read Full Answer >>
Related Articles

Markets
Using Historical Volatility To Gauge Future Risk
Use these calculations to uncover the risk involved in your investments. 
Markets
The Uses And Limits Of Volatility
Check out how the assumptions of theoretical risk models compare to actual market performance. 
Options & Futures
Options Risk Graphs: Visualizing Profit Potential
With a single diagram, you can see how price, time and volatility affect potential gains. 
Options & Futures
An Introduction To Value at Risk (VAR)
Volatility is not the only way to measure risk. Learn about the "new science of risk management". 
Options & Futures
The ABCs Of Option Volatility
The mystery of options pricing can often be explained by a look at implied volatility (IV). 
Fundamental Analysis
Calculating the HerfindahlHirschman Index (HHI)
The HerfindhalHirschman Index, (HHI) is a measure of market concentration and competition among market participants. 
Fundamental Analysis
Calculating Net Interest Margin
Net interest margin is a metric used to measure the effectiveness of a company’s investment decisions, particularly financial institutions. 
Investing
What More Volatility Means For Momentum Stocks
One byproduct of the recent tick higher in bond yields: a meaningful rise in volatility for both stocks and bonds. 
Options & Futures
How & Why Interest Rates Affect Options
The Fed is expected to change interest rates soon. We explain how a change in interest rates impacts option valuations. 
Economics
Why The U.S. Economy Is Ready For Liftoff
Though the U.S. economy is once again underperforming expectations, as it has for the past five years, the economy is ready for a (Fed) interest rate hike.