I'm currently doing an assignment on an airline company. Regarding the companies stocks, I have a question that asks the following: "Do a graphical representation of the share price volatility" I have the share price data for the period. But I am completely stumped on how to graphical representation of the volatility using a microsoft spreadsheet (excel). Does anyone know how to do this? Id really appreciate it!
What you'll want to do is input the numeric figures of the share price data into Excel if you haven't already. Once you've done that, there's a tool in Excel that can convert numeric figures into charts and graphs. In regards to conveying volatility, go with a graph figure that can best display the flucuation of share prices in whichever time period you're covering.
Oh, is that all it means? I have already entered the figures into the spreadsheet and have made a graph based on those figures. I was under the impression that share price volatility was like a future prediction of share prices?
Who knows? If you just plot the share prices over a certain amount of time you're not really getting volatility. I don't know much about excel but maybe there's built-in formulas to give you volatility. The standard deviation is one formula in math that could give you an idea of volatility. The standard deviation is the square root of the variance. You get the variance by taking all the numbers in a set, subtracting the mean of the set from each number, squaring it, adding them all together and then taking the average(dividing by number in the set) http://davidmlane.com/hyperstat/A16252.html There are also specialized formulas for stock volatility. http://www.investorwords.com/5256/volatility.html http://www.investorwords.com/4162/relative_volatility.html http://www.incrediblecharts.com/technical/volatility_indicators.php
Ah, that's what I was looking for. Thanks for the great info, I'll go play around with some numbers now! +rep Brett
I believe that "share price volatility" on its own, without any timescale reference, is a slightly vague term. Some stocks, for example, are notorious for having quite a lot of "intraday volatility" (they swing about a lot between opening and closing prices), others show only "weekly volatility" and so on. It relates typically to the industrial sector in which they trade, I think.
Check out the VIX measurement tool. It is used for the measurement of volatility in the market overall but this can be applied on a micro level to individual stocks as well.
I don't use excel, but if you want to measure volatility just bring up a chart showing the last 5 yrs of the stock and draw a line through the high and low points, however it won't look very accurate with the way the markets are right now.
Share price volatility basically means how it changes, if you drawa graph be sure to draw smooth curve lines covering the high and low points as well as doing a 20 & 40 day mean overlay to show how much the share price change differs from the average, the bigger the difference the higher the volatility.