What does Volatility measure?
✅ Lower = smaller fluctuations
Describes how much returns fluctuated over the period: the standard deviation of daily returns, scaled up to one year. A higher value means larger fluctuations.
How is Volatility calculated?
σ_daily × √252
σ_daily = standard deviation of daily returns · 252 = trading days per year
How are values of Volatility usually read?
- < 10 %
- quiet (bonds)
- 10 – 18 %
- normal (mixed portfolio)
- 18 – 25 %
- choppy (equities)
- > 25 %
- very choppy (leveraged/crypto)
Rules of thumb — where a value lands depends on asset class, period and market phase. A classification is no recommendation.
Worked example with real prices
Three securities from the test data, four allocations, calculated in the portfolio backtester over the same period:
| World equities | Euro government bonds | Gold | Volatility |
|---|---|---|---|
| 100 % | 0 % | 0 % | 15.30 % |
| 60 % | 40 % | 0 % | 9.45 % |
| 40 % | 40 % | 20 % | 7.51 % |
| 0 % | 100 % | 0 % | 5.05 % |
Prices from 13 Nov 2009 to 7 Oct 2026 in euros, starting capital €10,000, annual rebalancing, without order fees and taxes; Sharpe ratio with a risk-free rate of 2 %. Past results are no indication of future ones.
All three securities are in the test data — you can recalculate the example yourself on the free plan.
When is Volatility useful?
When you want to compare how unsettled the value was along the way.
What are the limits of Volatility?
Does not say how large a single loss can be, and it is not an upper or lower limit for a year's performance. Upward and downward moves count the same; the Sortino ratio looks only at losing days.
Where do you see Volatility for your own securities?
In the portfolio backtester, Volatility appears for every calculated allocation of your securities. The Watchlist shows it for each individual security.
Last updated: 30 Oct 2026