Historical Volatility – Part 6: Interpretation

Go back to Part 5: How To Annualise Standard Deviation. After we know the definition and how to calculate HV, we’ll move on to its interpretation. Example: If it is known that the value of HV is 35%. Remember that this HV value is annualised, i.e. for one year. As mentioned in the earlier post, assuming that price returns are normally distributed, about two-third of the time, an individual return would fall within one standard deviation of the...

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