202211281600 - Volatility
Market volatility refers to the magnitude and frequency of price fluctuations in financial markets, often used as a measure of risk and uncertainty. It is typically quantified using statistical tools like standard deviation or variance, which measure how much an asset's price deviates from its average over a specific time period.
High volatility indicates sharp and unpredictable price swings
low volatility suggests more stable price movements128.
Volatility can be driven by various factors, including:
- economic conditions (e.g., interest rate changes, 202504082306 - Inflation),
- geopolitical events (e.g., wars, pandemics), and investor sentiment.
It plays a crucial role in investment decisions, helping investors assess risk, price options, and construct diversified portfolios. While volatility is often associated with risk, it can also present opportunities for short-term gains, particularly for active traders. Tools like the Cboe Volatility Index (VIX), also known as the "fear index," are used to gauge market sentiment and implied future volatility134.
Citations:
[1] https://www.investopedia.com/terms/v/volatility.asp
[2] https://www.hsbc.co.uk/investments/understanding-market-volatility/
[3] https://www.home.saxo/learn/guides/market-volatility/what-is-market-volatility-and-why-does-it-matter-for-investors
[4] https://www.wallstreetprep.com/knowledge/volatility/
[5] https://www.investopedia.com/articles/financial-theory/08/volatility.asp
[6] https://www.sc.com/ae/wealth-insights/market-volatility/
[7] https://international.schwab.com/investing-education/how-traders-can-take-advantage-volatile-markets
[8] https://en.wikipedia.org/wiki/Volatility_(finance)
[9] https://www.usbank.com/investing/financial-perspectives/investing-insights/how-to-handle-market-volatility.html
[10] https://en.wikipedia.org/wiki/VIX
[11] https://www.morganstanley.com/articles/how-to-handle-volatility
[12] https://www.acorns.com/learn/investing/what-is-market-volatility/
[13] https://www.blackrock.com/us/financial-professionals/investments/preparing-portfolios/managing-volatility
[14] https://www.fidelity.com.sg/beginners/what-is-volatility/market-volatility
[15] https://napkinfinance.com/napkin/volatility/
[16] https://www.bankrate.com/investing/what-is-market-volatility/
[17] https://www.finra.org/investors/investing/investing-basics/volatility
[18] https://www.fidelity.com.sg/beginners/your-guide-to-stock-investing/understanding-stock-market-volatility-and-how-it-could-help-you
[19] https://www.wealthspire.com/financial-dictionary/volatility/