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This chart shows Volatility for Apartment Investment and Management Co., defined to be the price range as a portion of the average price: For instance, on 2/19/2010 the average price was 16.73 with a range of 0.29, indicating a Daily Volatility of 1.7%. Daily Volatility (the daily range as a portion of the daily average price) is plotted in green. Blue is Weekly Volatility, which is the weekly range as a portion of the weekly average price. It is important to avoid confusing this with the weekly average of the daily volatility, which is a completely different concept. For reference, the price is plotted in red. The remaining marks on the plot correspond to the Volatility measured across several time intervals. According to academic theory, Volatility is exactly equal to Risk. But investors often make a distinction between these two concepts. The different character of Volatility as seen in different time frames, lends some support to the investor's view. During 16 years, the Average Quarterly Volatility of AIV stock price has been 22% while the Average Daily Volatility has been 2%. |
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You may be familiar with the "yield curve" which shows how interest bearing yields vary according to term. Each Volatility Curve is a snapshot in time. From left to right, each position plots the Volatility associated with increasing intervals of time. The relationship between the length of time, and the expected change in price, is not linear, as is demonstrated by this chart. |
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This histogram is a frequency distribution of Daily Volatility, corresponding to the green points on the first chart on this page. |
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Similarly, the purple points on the top chart, the Quarterly Volatility Values, are subjected to frequency distribution here. |
Refined Volatility Risk Analysis for AIV : |
| Thursday, March 18, 2010: We have news on Mylan Inc., ticker symbol MYL. Signs of an over-bought condition have become noticable. Also, there are breaking events concerning Goldman Sachs Group, Inc. and MicroSoft. From the News Archive: (3/17/2010 ) Favorable events happened at ACM Income Fund and LoJack Corp. Meanwhile, bad news came from Prudential Financial, Inc. and Sempra Energy. |