Tag Archives: Volatility

Standard deviation (sigma σ) measures volatility or the dispersion of random values around the mean of a variable such as a portfolio or individual stock prices, but does not measure the direction of a trend. Standard Deviation as volatility measure What has become the bedrock of finance is an out-of-date almost universally accepted finance theory, which uses the statistical normal distribution (the Gaussian bell curve) as the measure of risk per se. In reality stocks are found not to be...

A selloff as violent as the one global equities markets experienced this past Monday can have effects that mirror a real-life earthquake. Once the earth stops moving, shell-shocked investors have to figure out what caused all the shaking and whether aftershocks are coming. They also have to determine whether anything valuable is hiding in the debris.   To the first point, it’s quite clear that trouble in China was the catalyst for the rout. It all started on Friday, August 21, when...