Stock Market Volatility

Stock Market Volatility refers to the degree of variation in the price of Stocks over a specific period of time. It is often measured by the standard deviation of Returns or the average true range. High volatility indicates that the price of a Stock can change dramatically in a short time, while low volatility suggests that a Stock’s price remains relatively stable.

For instance, during economic downturns, such as the 2008 financial crisis, Stock market volatility tends to increase as investor sentiment becomes uncertain. Conversely, in a stable economic environment, such as the years following the recovery from the crisis, volatility may decrease as investors gain confidence.

Another example is the rapid fluctuations seen in technology Stocks during the COVID-19 pandemic. Stocks like Zoom and Peloton experienced significant price increases due to a surge in demand, followed by sharp declines as market conditions changed.