Asked by: Suying Robertsonpersonal finance options
How is stock volatility calculated?
Last Updated: 28th April, 2020
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Also to know is, what is the volatility of a stock?
Volatility ismeasured using the standard deviation in price change of astock's price against its price at any given time, ormeasured as the variance of the change of the stock priceagainst a benchmark, for example a market index. A commonly quotedmeasure of volatility is a stock's beta.
Subsequently, question is, what is the best measure of volatility? Where standard deviation measures a security'sprice movements compared to its average over time, betameasures a security's volatility relative to that ofthe wider market. A beta of 1 means the security hasvolatility that mirrors the degree and direction of themarket as a whole.
Thereof, how do you calculate annual volatility?
Annualizing volatility To present this volatility in annualized terms,we simply need to multiply our daily standard deviation by thesquare root of 252. This assumes there are 252 trading days in agiven year. The formula for square root in Excel is =SQRT().In our example, 1.73% times the square root of 252 is27.4%.
What is a good volatility for stock?
Volatility From the Investor's Point of View.Stock market volatility is arguably one of the mostmisunderstood concepts in investing. Simply put, volatilityis the range of price change a security experiences over a givenperiod of time. If the price stays relatively stable, the securityhas low volatility.