📈 Volatility Analysis
Analyze asset volatility and risk metrics to make informed trading decisions. Calculate historical volatility, Value at Risk (VaR), and assess the risk profile of any asset. Perfect for traders using our position size calculator and risk management tools.
Volatility & Risk Analysis
Enter historical price data to calculate volatility and risk metrics
Volatility Analysis Results
Value at Risk (VaR) Analysis
Understanding Volatility Analysis
What is Volatility?
Volatility measures the degree of price variation over time. It's calculated as the standard deviation of price returns and indicates how much prices fluctuate around their average.
Asset-Specific Annualization
Stocks (√252): 252 trading days per year
Crypto (√365): 365 days - trades 24/7
Forex (√260): 260 days - 5 days/week, 24hrs
Using correct factors ensures accurate comparisons.
Risk Assessment
Low Volatility (0-15%): Stable assets, lower risk
Medium Volatility (15-30%): Moderate risk assets
High Volatility (30%+): High risk, high reward potential
Value at Risk (VaR)
VaR estimates the maximum potential loss over a specific time period at a given confidence level. A 95% VaR of 5% means there's a 5% chance of losing more than 5% in the specified period.
How to Use the Volatility Analyzer
Enter Asset Information
Input the asset name and select the analysis period. Longer periods provide more robust volatility estimates but may not reflect recent market changes.
Input Price Data
Enter daily closing prices for the asset. Use at least 20 data points for reliable results. Sample data is available to test the calculator with different volatility profiles.
Analyze Results
Review volatility metrics, risk assessment, and VaR calculations. Use these insights for position sizing, risk management, and portfolio construction decisions.
Frequently Asked Questions
What is volatility in trading?
Volatility measures the degree of price variation over time. Higher volatility means larger price swings, indicating higher risk but also potentially higher returns. It's typically measured as the standard deviation of price returns.
How is historical volatility calculated?
Historical volatility is calculated by finding the standard deviation of daily price returns over a specific period. The result is annualized using asset-specific factors: stocks (√252), crypto (√365), forex (√260), reflecting actual trading schedules.
What is Value at Risk (VaR)?
Value at Risk (VaR) estimates the maximum potential loss over a specific time period at a given confidence level. For example, a 95% VaR of 5% means there's a 5% chance of losing more than 5% in the specified period.
How should I interpret volatility levels?
Generally, annual volatility below 15% is considered low, 15-30% is moderate, and above 30% is high. However, interpretation depends on the asset class - cryptocurrency typically has higher volatility than government bonds.
Master Risk Management
Volatility analysis is essential for risk management. Combine with our position sizing and stop loss calculators, then take your trading to the next level with our AI-powered Infinity Algo indicator for advanced risk-adjusted signals.