Sources: IRS, SEC, Federal Reserve, U.S. Bureau of Labor Statistics & U.S. Census Bureau. See our editorial standards.
A measure of how much an investment’s price swings up and down over time.
Definition: A measure of how much an investment’s price swings up and down over time.
Volatility describes the size and frequency of price movements. High-volatility assets (like individual tech stocks or crypto) can soar or plunge quickly, while low-volatility assets (like bonds or broad index funds) move more gently. Volatility is not the same as risk of permanent loss — for long-term investors, short-term volatility is largely noise.
Often measured by standard deviation of returns, or by "beta" relative to the market.
A stock that regularly swings 5% in a day is far more volatile than an S&P 500 index fund that typically moves under 1% daily. The volatile stock offers bigger potential gains and losses.
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