Volatility
Definition Volatility refers to the rate at which the price of a security, market index or commodity goes up or down. It’s measured by the standard deviation of logarithmic returns and represents the risk associated with the security’s price changes. High volatility indicates greater price swings, which can mean higher risk and potential reward for investors. Importance of Volatility Risk Assessment: Investors use volatility to assess the risk of an investment; higher volatility means higher risk, which might lead to larger gains or losses.