Historical Volatility - HV

AAA

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
  1. Variance

    The spread between numbers in a data set, measuring Variance ...
  2. Volatility Arbitrage

    Trading strategies that attempt to exploit differences between ...
  3. Historical Returns

    The past performance of a security or index. Analysts review ...
  4. Standard Deviation

    1. A measure of the dispersion of a set of data from its mean. ...
  5. Non-Fluctuating

    The characteristic of constancy in a security or measurement's ...
  6. Value At Risk - VaR

    A statistical technique used to measure and quantify the level ...
Related Articles
  1. Using Historical Volatility To Gauge ...
    Markets

    Using Historical Volatility To Gauge ...

  2. The Uses And Limits Of Volatility
    Markets

    The Uses And Limits Of Volatility

  3. Options Risk Graphs: Visualizing Profit ...
    Options & Futures

    Options Risk Graphs: Visualizing Profit ...

  4. An Introduction To Value at Risk (VAR)
    Options & Futures

    An Introduction To Value at Risk (VAR)

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center