Volatility Analysis Tool - Historical Volatility & VaR Calculator

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.

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.

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.

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.

Absolutely! Higher volatility means larger potential losses, so reduce position sizes when volatility is elevated. Many traders cut position sizes by 25-50% during high volatility periods to maintain the same dollar risk. Use our position sizing calculator to adjust for volatility.

Historical volatility measures past price movements, while implied volatility reflects market expectations for future volatility (derived from options prices). Implied volatility is forward-looking and often used for pricing derivatives, while historical volatility shows actual past behavior.