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Volatility – Ubiquitous, Yet Evasive?

by Eben Maré, Portfolio Manager, Stanlib

In this article we discuss aspects of asset class volatility. We look specifically at the VIX index and some of its properties – VIX has become very popular in the media of late, especially with low historical levels being printed. We try to understand its implications.

What is volatility?

Volatility is a statistical measure of the dispersion of asset returns. High volatility levels would typically imply a large spread (or distribution) of potential asset returns when compared to an asset with low volatility.

In essence, volatility is the standard deviation of asset returns measured over some period and typically annualised for comparative purposes.