Historical volatility is a measure of how much the price of a financial asset has fluctuated in the past. It is usually calculated over a specific period, such as 30, 90, or 252 trading days, and is expressed as a percentage. It shows how strongly and how frequently prices have moved up and down.
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A holding company earns value through ownership and control of other businesses.
Historical volatility reflects the degree of past price fluctuations in a market.
The calculation of historical volatility is based on the standard deviation of past returns. A higher percentage means the asset’s price has moved more widely around its average, while a lower percentage indicates more stable price behavior. Investors use historical volatility to assess risk, compare assets, and estimate potential future price ranges. However, it only describes past behavior and does not guarantee how the asset will move in the future. Market conditions, economic events, and investor sentiment can cause future volatility to differ significantly from historical levels.
Short example:
Suppose a stock trades between $95 and $105 over several months with only small daily changes.
Its historical volatility would be relatively low because price movements are limited.
If another stock moves between $70 and $130 during the same period, its historical volatility would be much higher due to larger price swings.
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