Markets
Volatility
How much a price swings around, up and down, over a given period.
A share that moves one percent on a typical day is more volatile than one that moves a tenth of a percent. Volatility measures the size of those swings, not their direction: a price that only rises, but in violent jumps, is volatile.
It matters because two investments with the same average return are not equivalent if one gets there smoothly and the other by way of a fifty percent fall along the way.
See also
This definition is part of the EPTA5 lexicon, written so that a reader who does not work in finance can follow our market notes without stopping. It is general information and not investment advice. Read the notes.