- A measure of risk based on the standard deviation of investment fund performance over 3 years. Scale is 1-9; higher rating indicates higher risk. Also, the standard deviation of changes in the logarithm of an asset price, expressed as a yearly rate. Also, volatility is a variable that appears in option pricing formulas. In the option pricing formula, it denotes the volatility of the underlying asset return from now to the expiration of the option. The New York Times Financial Glossary
* * *volatile vol‧a‧tile [ˈvɒlətaɪl ǁ ˈvɑːlətl] adjectivea volatile market, situation etc is changing quickly and suddenly, for example rising and falling without much warning:
• Bonds started the year in a highly volatile trading environment.— volatility noun [uncountable] :
• The report questioned whether market volatility should be blamed on foreign investors.
* * *Volatility describes the degree to which a value, such as a stock price or an interest rate, changes over a specified time period. High volatility means that the value changes dramatically, usually due to high market uncertainty. Traders thrive on market volatility because it presents many opportunities to earn a profit. Low volatility means values change minimally, as is the case when all news has been priced into the market. Professional investors tend to benefit from low volatility because they are better able to lock in stable returns. The financial markets distinguish between historical volatility and implied volatility. Historical volatility is a measure of volatility based on past price or yield behaviour, while implied volatility is implied by the price of an option.
* * *volatile UK US /ˈvɒlətaɪl/ US /ˈvɑːlətəl/ adjective► likely to change often or suddenly and unexpectedly: »
American technology shares remain volatile.»
a volatile fund/investment/market»
Property has always been less volatile than shares or gilts.volatility noun [U]► »
Some investors are nervous about market volatility.
Financial and business terms. 2012.