Understanding Volatility

What is Volatility?

Volatility refers to the price fluctuations of a particular item, such as an individual stock or a whole market or portfolio.

Stock markets aren’t the only market with fluctuating prices. Fresh produce, for example, may not be the same price from week to week, depending on the season or supply. Same with gas prices – when supply is plentiful, prices can drop, sometimes dramatically.

How much the price changes determines how high the volatility is for that item. If the price is fairly stable, butter for example, that item is said to have low volatility.

Higher volatility – and specifically market corrections – can be unnerving. Shorter-term declines can happen fairly frequently and may trigger the fear of a bigger market decline.

Wondering how it impacts your daily life as well as your portfolio? Explore the resources below.

What Can You Do During Stock Market Volatility?

It’s important to remember that no one can predict exactly when the markets will rise or fall – or precisely how significant that change will be. But what we can control is how we react to those market events.

Here are a couple of tips for staying calm when market volatility occurs:

What is Inflation and Why Does it Matter?