Risk and return · updated October 21, 2026
What is a stock's volatility and how is it calculated
Volatility shows how much a stock's price usually moves from one day to the next, scaled up to a year. A volatility of 30% means that in a normal year the price can stray about 30% from its average, up or down.
Volatility formula
- Daily returns
- By what percentage the price changed each day.
- Standard deviation
- How spread out those changes are around their average.
- √252
- Scales the number up to a year (a year has about 252 trading days).
Worked example
A stock usually moves 1.9% a day, up or down.
For a $100 stock, a normal year can end anywhere between $70 and $130.
How to read volatility
The S&P 500 has a volatility of about 15-20% a year. Bitcoin has often been above 60%.
When volatility can fool you
It does not show direction: a stock rising steadily has low volatility, and one that suddenly collapses can have low volatility right up to the day it falls. Past, not future.
Related terms
Questions about volatility
Is volatility the same as risk?
It is the most widely used measure of risk, but not the only one. It does not show bankruptcy risk or rare, large drops.
These explanations are for information only. They are not a recommendation to buy or sell.
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