The volatility of a stock (a tradable stock) that is measured to quantify the likelihood of a change in its market price. Stock volatility is usually measured using the standard deviation of a stock’s returns over a specific time horizon. Volatility reflects potential changes in a stock’s market price over a span of time, but not the direction its price would follow.

Stock volatility is a measure of how much a stock’s price or value increases (upside) and decreases (downside) within a specific period of time. In general, the more volatile a stock is, the more risk an investor, holding the stock, would be exposed to. The magnitude of volatility depends on the size of an issuer (the company issuing the stock), relative to the market. Stock prices of small size companies usually feature more volatility than those of large companies.

Stock volatility arises from swings in share prices due to multiple factors, including changes in supply and demand, news releases, dividend announcements, etc.

Stock volatility is often synonymous with risk for investors who already joined the market, since existing investors generally seek a stable source of returns. However, volatility can also provide opportunities to attain capital gains and returns, for both existing and potential investors.