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==Origin==
French, from [[Latin]] ''volatilis'', from ''volare'' to fly
*[http://en.wikipedia.org/wiki/17th_century 1605]
==Definitions==
*1: readily vaporizable at a relatively low [[temperature]]
*2: flying or having the [[power]] to fly
*3.a : lighthearted, lively
:b : easily aroused <volatile [[suspicions]]>
:c : tending to erupt into [[violence]] : explosive <a volatile temper>
*4.a : unable to hold the [[attention]] fixed because of an inherent lightness or fickleness of disposition
:b : characterized by or subject to rapid or unexpected [[change]] <a volatile [[market]]>
*5: [[difficult]] to capture or hold permanently : evanescent, [[transitory]]
==Description==
In [[finance]], '''volatility''' is a [[measure]] for variation of price of a financial instrument over [[time]]. Historic volatility is derived from time [[series]] of past market prices. An [http://en.wikipedia.org/wiki/Implied_volatility implied volatility] is derived from the market price of a market traded derivative (in particular an option). The symbol σ is used for volatility, and corresponds to [http://en.wikipedia.org/wiki/Standard_deviation standard deviation], which should not be [[confused]] with the similarly named variance, which is instead the square, σ2. Much [[research]] has been devoted to [[modeling]] and [[forecasting]] the volatility of financial returns, and yet few [[theoretical]] models explain how volatility comes to exist in the first place.
[[Category: Economics]]
[[Category: Physics]]
==Origin==
French, from [[Latin]] ''volatilis'', from ''volare'' to fly
*[http://en.wikipedia.org/wiki/17th_century 1605]
==Definitions==
*1: readily vaporizable at a relatively low [[temperature]]
*2: flying or having the [[power]] to fly
*3.a : lighthearted, lively
:b : easily aroused <volatile [[suspicions]]>
:c : tending to erupt into [[violence]] : explosive <a volatile temper>
*4.a : unable to hold the [[attention]] fixed because of an inherent lightness or fickleness of disposition
:b : characterized by or subject to rapid or unexpected [[change]] <a volatile [[market]]>
*5: [[difficult]] to capture or hold permanently : evanescent, [[transitory]]
==Description==
In [[finance]], '''volatility''' is a [[measure]] for variation of price of a financial instrument over [[time]]. Historic volatility is derived from time [[series]] of past market prices. An [http://en.wikipedia.org/wiki/Implied_volatility implied volatility] is derived from the market price of a market traded derivative (in particular an option). The symbol σ is used for volatility, and corresponds to [http://en.wikipedia.org/wiki/Standard_deviation standard deviation], which should not be [[confused]] with the similarly named variance, which is instead the square, σ2. Much [[research]] has been devoted to [[modeling]] and [[forecasting]] the volatility of financial returns, and yet few [[theoretical]] models explain how volatility comes to exist in the first place.
[[Category: Economics]]
[[Category: Physics]]
