While volatility (standard deviation) looks be a life like measure of risk when evaluating a large portfolio,
it is now not ample to explain the returns of man or woman securities, considering the fact that there is no clear relation between volatility and return for character stocks.
Sometimes costs cross extra rapidly than at other times. The velocity or degree of the fee alternate (in either direction) is known as volatility. As volatility increases, the attainable to make extra cash quickly, additionally increases. The tradeoff is that higher volatility additionally capacity greater risk.
Typically, merchants speak about four unique forms of volatility, again depending on what they are doing in the markets. This chapter discusses the four exceptional volatilities: future volatility, historical volatility, forecast volatility, and implied volatility.
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