Volatility Analysis for American Express
Volatility is defined as the price range for a period, divided by the average price for the period:|
For instance, on 2/4/2011 the average price was 43.54 with a range of 0.72, indicating a Daily Volatility of 1.6%. 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.
Investors often make a distinction between the concept of Volatility, and the concept of Risk. Academics define them to be exactly equivalent, but as can be seen here, there is good reason to distinguish between the levels of volatility or risk experienced across different time frames. Average Daily Volatility over the history of AXP has been 3% in contrast to the Average Quarterly Volatility of 24%.
You may be familiar with the "yield curve" which shows how interest bearing yields vary according to term. These Volatility Curves each apply to a discrete time interval. From left to right, each position plots the Volatility associated with increasing intervals of time. However, as seen in this plot of the AXP Volatility Curve, the increase is not constant. |
This histogram is a frequency distribution of Daily Volatility, corresponding to the green points on the first chart on this page. |
Similarly, the purple points on the top chart, the Quarterly Volatility Values, are subjected to frequency distribution here. |
For Subscribers: Refined Analysis of American Express Volatility and Risk Behavior
Companies in the News:
|Friday, February 18, 2011: We have news on Fiserv, Inc., ticker symbol FISV. Signs of an over-bought condition have become noticable. Also, there are breaking events concerning Zimmer Holdings, Inc. and McCormick & Company, Incorporated. |
From the News Archive: (2/18/2011 ) Bad news came from Reynolds American, Inc., Dollar Tree, Inc., Zimmer Holdings, Inc., and NVIDIA Corp.
More AXP Technical Analysis Topics
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