ATLASVolatility
Investing glossary · Risk and statistics
How widely and quickly a price moves around; usually the annualized standard deviation of its returns.
Definition
Volatility measures how much the price of an investment fluctuates. In finance it is usually the standard deviation of its returns, quoted per year. A stock with 20% annual volatility typically moves within about 20% of its average yearly return in a normal year; one with 60% volatility swings three times as much.
Volatility is not the same as loss: prices can be volatile and trend up. But it is the standard yardstick of risk, because high volatility means a wider range of outcomes and larger temporary drops. Volatility changes over time, it rises in crises and falls in calm markets, so any estimate is a snapshot.
Formula
σ_annual = σ_daily × √252
σ_daily = standard deviation of daily returns; 252 is the usual number of trading days in a year.
Worked example
ATLAS estimates a daily volatility of 2.08% for NVIDIA (NVDA), which annualizes to 33%. Over a month (21 trading sessions) the typical move is about 9.5%, roughly $20.88 on a price of $219.06.
The monthly figure is a one-standard-deviation move: bigger moves happen regularly, so do not treat it as a limit.
How ATLAS uses it
Volatility is the main input of the ATLAS probability model: it sets how wide the expected range is. ATLAS blends recent volatility with the stock's long-run level so quiet periods do not understate the risk.
Related in ATLAS: Stock analysis →Browse all ATLAS tools →See it on a real stock
The example above uses these companies. Open their pages for the full numbers:
Frequently asked questions
Is high volatility bad?
It means more uncertainty in both directions. For a short-term goal it is a risk; for a long-term investor it can be acceptable if the return compensates for it.
What is the difference between volatility and beta?
Volatility measures how much a stock moves on its own. Beta measures how much it moves relative to the market.
Related terms
Put the idea to work on your own stocks
Open any company in ATLAS to see its fair value, its odds of rising and its risk numbers side by side.
Try ATLAS →Not investment advice. ATLAS estimates are produced by statistical models from public data; they can be wrong and past performance does not predict future results. Consider your own situation before investing. Disclaimer