The price movement that is experienced by a security, commodity, or market, usually rising and falling sharply within a short period of time. However, volatility may not always imply sharp rises or drops in an asset price. At times, volatility may be stable or flat, and nevertheless a state of volatility is still considered in existence.

In general, volatility refers to sharp movement in prices or rates due to specific factors, individually or combined, such as high market risk, paradigm shifts in market fundamentals within a short period, and so on.

If volatility is related to the broad market (i.e., relative volatility), a measure known as beta is used. Beta constitutes the relative volatility of a tradable asset (e.g., a stock) to the overall market.

Volatility reflects the degree of variation of a trading price series over time, as measured by the standard deviation (SD) of logarithmic returns. It may take many guises including historical volatility, forward volatility, expected volatility, etc.

Volatility is also referred to as variability.