1. Glossary > Risk Management
  2. Volatility

Volatility measures risk, reflecting the level of variation of the price of a security. Volatility is calculated on the standard deviation of the return of an asset over a certain period of time. If an instrument has a volatility of 20%, for example, then it has the potential of increasing or decreasing by that amount over the given time. The higher the volatility, the higher the risk. Beta measures the volatility of a stock relative to the market.

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