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The most-used, least-loved risk metric. Easy to compute, blind to tail risk.
Volatility is the annualized standard deviation of returns. Often used interchangeably with "standard deviation," though volatility technically refers to the annualized version. Equity index volatility is typically 12–20% per year; single stocks 25–60%; crypto 60–120% on majors.
Volatility_annual = σ_daily · sqrt(252)σannual = σdaily · sqrt(252)Compute the daily standard deviation, multiply by sqrt of trading days per year. Done.
Volatility is intuitive, easy to compute, and a poor measure of risk for non-normal distributions. Two portfolios with identical 15% annualized volatility can have wildly different real-world risk if one has fat tails or negative skew. Always pair volatility with kurtosis and skewness.
Daily returns have standard deviation of 1.0%.
Annualized volatility = 1.0% · sqrt(252) = 15.87%
Annualized volatility by asset class:
| Asset | Volatility |
|---|---|
| Cash / T-bills | 0–1% |
| Investment-grade bonds | 4–6% |
| 60/40 balanced | 9–12% |
| S&P 500 | 15–20% |
| Concentrated equities | 25–40% |
| BTC | 60–80% |
| Altcoins | 100%+ |
Standard Deviation · Sharpe Ratio · Downside Deviation · Kurtosis
Volatility is the annualized version. Standard deviation is the raw period statistic. Some software uses them interchangeably.
Multiply by the square root of the number of periods per year. Daily → sqrt(252). Monthly → sqrt(12). This assumes returns are independent, which is roughly true day-to-day.
It penalizes upside and downside equally, and it assumes normal distributions. Real markets have fat tails. Use downside deviation or Ulcer Index for behavioral honesty.
Yes — annualized from daily portfolio returns using the metrics engine's flow-adjusted methodology. This is the single source of truth for all volatility numbers on the site.
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