Historical Volatility - HV
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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".
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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.
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Use these calculations to uncover the risk involved in your investments.
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The mystery of options pricing can often be explained by a look at implied volatility (IV).
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Check out how the assumptions of theoretical risk models compare to actual market performance.
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With a single diagram, you can see how price, time and volatility affect potential gains.
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Volatility is not the only way to measure risk. Learn about the "new science of risk management".
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