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Applying a simpler volatility measure
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FOT-March 2009-2
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A close look at the gain-loss spread demonstrates how it can pinpoint volatility patterns that standard deviation might miss.
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Detailed Description
In the wake of last years stock market collapse, everyone seems to be talking about volatility. However, few investors really understand what volatility is and how to calculate it. Volatility is typically measured by standard deviation, a somewhat abstract concept for most investors. Luckily, there are more tangible ways to measure volatility including a new calculation introduced by Professor Javier Estrada from the IESE Business School in Spain.
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