Volatility

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Dictionary Says

Definition of 'Volatility'

1. A statistical measure of the dispersion of returns for a given security or market index. Volatility can either be measured by using the standard deviation or variance between returns from that same security or market index. Commonly, the higher the volatility, the riskier the security.

2. A variable in option pricing formulas showing the extent to which the return of the underlying asset will fluctuate between now and the option's expiration. Volatility, as expressed as a percentage coefficient within option-pricing formulas, arises from daily trading activities. How volatility is measured will affect the value of the coefficient used.
Investopedia Says

Investopedia explains 'Volatility'

In other words, volatility refers to the amount of uncertainty or risk about the size of changes in a security's value. A higher volatility means that a security's value can potentially be spread out over a larger range of values. This means that the price of the security can change dramatically over a short time period in either direction. A lower volatility means that a security's value does not fluctuate dramatically, but changes in value at a steady pace over a period of time.

One measure of the relative volatility of a particular stock to the market is its beta. A beta approximates the overall volatility of a security's returns against the returns of a relevant benchmark (usually the S&P 500 is used). For example, a stock with a beta value of 1.1 has historically moved 110% for every 100% move in the benchmark, based on price level.  Conversely, a stock with a beta of .9 has historically moved 90% for every 100% move in the underlying index.
Search results for

'Volatility'

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    The market’s recent ups and downs have been stomach churning. Low volatility funds
    can help smooth out the ride. ... Seasick? Try A Low Volatility Fund. ...

  • Market Volatility, Weak Economy Delay Major IPOs - Investopedia. ...

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    ... Market Volatility, Weak Economy Delay Major IPOs. Posted:
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  • Volatility's Impact On Market Returns

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    Volatility's Impact On Market Returns. ... Read More »; Price Volatility Vs. Leverage.
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  • Tired Of Volatility? Invest In The Movies

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    ... Tired Of Volatility? Invest In The Movies. Posted ... 2009. The global economy is
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  • The Volatility Index: Reading Market Sentiment

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    The Volatility Index: Reading Market Sentiment. ... As stated earlier, the VIX
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  • Price Volatility Vs. Leverage

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    Price Volatility Vs. Leverage. May ... When constructing a trading plan, one thing
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  • A Simplified Approach To Calculating Volatility

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    Though most investors use standard deviation to determine volatility,
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  • Options Trading: How Implied Volatility Affects Calendar Spread

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    Even if the risk curves for a calendar spread look enticing, a trader needs to assess
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  • Taking Advantage Of Volatility Spikes With Credit Spreads

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    Taking Advantage Of Volatility Spikes With Credit Spreads. ... As such, when the stock
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  • Maximize Profits With Volatility Stops

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    Maximize Profits With Volatility Stops. ... Read More »; Price Volatility Vs. Leverage.
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