What is Stock Volatility?
– Stock Volatility Definition – Volatility is an indicator of the riskiness and potential for profit that the stock has. The greater the difference between the high and low, the riskier the stock is for loss and gain. If the difference between the high and low is small, then there is little potential for either loss or gain. Some stock investors can “stomach” more volatility than others.
Stock volatility refers to the potential for a given stock to experience a drastic decrease or increase in value within a predetermined period of time. Investors evaluate the volatility of stock before making a decision to purchase a new stock offering, buy additional shares of a stock already in the portfolio, or sell stock currently in the possession of the investor. The idea behind understanding stock volatility is to arrange investments so that a maximum return with minimal opportunities for loss is achieved. There are number of factors that can impact stock volatility. One of the major concerns is the stability of the underlying assets supporting the stock issue. For example, if public confidence in a corporation should suddenly decrease, there is a good chance that the stock issue will also experience a significant drop. The cause for the change in public perception may be something as simple as a pending merger or a change in leadership. When that is the case, the stock may begi
The most basic definition for the volatility of a stock is the fluctuation of trading prices for the stock. In the stock market, the price of all stocks will usually vary through the day and week, sometimes by small amounts and sometimes by large amounts. Each trade on the market may make the price go up, down, or remain the same. Changing prices during trading constitute the volatility of the stock. This refers to the fluctuation only of the stock trading price, regardless of whether the price change is up or down. The volatility of the stock will reflect the level of risks involved because a stock with high volatility will incur a higher risk than one with low volatility. The volatility of a stock is measured by how wide the range of value is for the stock over a given time period. The change in value of the stock may make wide swings, which means more risk because the price can change substantially in a small amount of time. The net change of the closing price for a stock over a len
