Volatility

Definition

How much and how quickly an investment's price moves over time. Higher volatility means larger price swings in either direction.

Volatility describes the size of price swings, whether they are up or down. Analysts can measure it from past returns or estimate what traders expect from option prices. The time period matters when comparing volatility across assets.

Example

Company A’s shares move between $95 and $105 during the week. Company B’s move between $99 and $101. Company A had larger price swings.