# Historical Volatility

Historical Volatility

Historic or historical volatility is a statistical measure that shows not directional moves in a security or index but its tendency to fluctuate. Historic volatility measures the distribution of returns of a security or index over a set period, derived by calculating its average deviation (from its average price) over that period. Higher-risk securities or indices will tend to have higher price fluctuations hence higher historic volatility. The degree of statistical volatility can be used by traders and investors to set their return parameters.