Volatility
Definition
A statistical measure of the dispersion of returns — how much and how quickly prices change.
Explanation
Volatility is both risk and opportunity. Historical volatility measures past price movements. Implied volatility reflects market expectations of future movements (derived from option prices). The VIX index measures implied volatility of S&P 500 options and is called the 'fear gauge' — it typically ranges from 12-20 in calm markets and spikes above 30-80 during crises. Annualized volatility of 20% means, roughly, the asset's price is expected to stay within ±20% of its current level about 68% of the time over the next year.
How Stoquity Uses This
Stoquity incorporates volatility analysis across its portfolio management platform, providing real-time monitoring and AI-powered insights for every portfolio.