Volatility
A statistical measure of the dispersion of returns for a given security or market index.
Definition
Volatility is a statistical measure of the dispersion of returns for a given security or market index. It is often measured by the standard deviation or variance of returns. Higher volatility means the price of the security can change dramatically over a short time period in either direction, while lower volatility means prices are more stable. The VIX index (often called the "fear index") measures expected volatility in the S&P 500. Historical volatility looks at past price movements, while implied volatility is derived from options prices and reflects market expectations. Volatility is not the same as risk, but it is a key component of risk assessment.