Portfolio Risk & Return

Volatility

How much a portfolio’s or a holding’s returns swing around their average, measured as the annualized standard deviation of daily returns. A volatility of 15% means that in a typical year the return lands within about 15 percentage points of its average roughly two times out of three. Higher volatility means a bumpier ride — bigger gains in good stretches and bigger losses in bad ones — and it is the yardstick most risk measures are built on, including the Sharpe ratio and Value at Risk. Broad stock-market funds have historically run at around 15% to 20%, high-quality bond funds far lower, and single fast-growing companies or crypto far higher. The catch: volatility counts a sharp rise exactly the same as a sharp fall, and it describes ordinary swings rather than the rare crash — for that, look at maximum drawdown and expected shortfall.

Educational information, not investment advice. See it applied across the screener →