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Investing & the Stock Market vocabulary · Portfolio & Risk

Volatility

Meaning in investing & the stock market, with examples

/ˌvɑːləˈtɪləti/nounCore term

In investing & the stock market, volatility means: How much and how quickly the price of an investment or a market moves up and down. High volatility means large, frequent price swings.

In Turkish: oynaklık, volatilite, dalgalanma

How it is used

Used in news, risk reports and fund documents. Volatility rises, spikes or calms down; investors fear, tolerate or manage volatility. It is often measured by standard deviation, and the VIX index is called the 'fear gauge'. The adjective is 'volatile'.

Example sentences

  1. Volatility spiked after the surprise interest rate decision.

  2. Small-cap stocks usually show higher volatility than large companies.

Common collocations

  • high volatility
  • market volatility
  • volatility spiked
  • reduce volatility
  • implied volatility
  • risk toleranceHow much loss or how big a swing in value an investor is willing and able to accept in exchange for the chance of higher returns.
  • diversificationSpreading money across different investments, sectors, countries or asset classes so that a loss in one of them has a smaller effect on the whole portfolio.
  • hedgeTo reduce the risk of losing money on an investment or business exposure by taking an opposite position, often with derivatives such as futures or options.
  • bear marketA long period in which prices in a market fall and investors are generally pessimistic. It is often defined as a fall of 20 percent or more from a recent high.
  • returnThe gain or loss on an investment over a period, including price changes and any income such as dividends or interest, usually shown as a percentage.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Portfolio & Risk

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This page explains English vocabulary for learners. It is not financial advice.