Historical Volatility
Historical volatility is a measure of how much the stock price fluctuated during a given time period (in past). It is referred to as the asset's actual or realized volatility.
Traders make use of historical volatility to estimate the future movement, but there is a chance that the future volatility could deviate from the expected value as the factors influencing the price could change. Major fundamental changes could cause the asset price to stray away from the expected historical volatility.
Interpretation of Historical Volatility
Historical Volatility does not measure direction, it just measures how much the securities price is deviating from its average.
When a security’s Historical Volatility is rising, or higher than normal, it means prices are moving up and down farther/more quickly than usual and is a sign that something is likely to happen, or has already happened, regarding the underlying security.
When a security’s Historical Volatility is falling, it implies that the uncertainty regarding the security has reduced and things are returning back to usual.
Historical volatility is a measure of how much the stock price fluctuated during a given time period (in past). It is referred to as the asset's actual or realized volatility.
Traders make use of historical volatility to estimate the future movement, but there is a chance that the future volatility could deviate from the expected value as the factors influencing the price could change. Major fundamental changes could cause the asset price to stray away from the expected historical volatility.
Interpretation of Historical Volatility
Historical Volatility does not measure direction, it just measures how much the securities price is deviating from its average.
When a security’s Historical Volatility is rising, or higher than normal, it means prices are moving up and down farther/more quickly than usual and is a sign that something is likely to happen, or has already happened, regarding the underlying security.
When a security’s Historical Volatility is falling, it implies that the uncertainty regarding the security has reduced and things are returning back to usual.
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