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Topic: Volatility risk

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	Volatility risk - Wikipedia, the free encyclopedia
		Volatility risk in financial markets is the likelihood of fluctuations in the exchange rate of currencies.
		Therefore, it is a probability measure of the threat that an exchange rate movement poses to an investor's portfolio in a foreign currency.
		The volatility of the exchange rate is measured as standard deviation over a dataset of exchange rate movements.
	en.wikipedia.org /wiki/Volatility_risk (125 words)

	Encyclopedia :: encyclopedia : Risk (Site not responding. Last check: 2007-10-31)
		Risk is often mapped to the probability of some event which is seen as undesirable.
		In information security a "risk" is defined as a function of three variables: the probability that there's a threat, the probability that there are any vulnerabilities, and the potential impact.
		Risk in that case is the degree of uncertainty associated with a return on an asset.
	www.hallencyclopedia.com /Risk (1590 words)

	Risk - Wikipedia, the free encyclopedia
		Therefore, the differentiation of risk definitions depends on the losses context, their assessment and measurement, as well as, when the losses are clear and invariable, for example a human life, the risk assessment is focused on the probability of the event, event frequency and its circumstances.
		Financial risk is often defined as the unexpected variability or volatility of returns, and thus includes both potential worse than expected as well as better than expected returns.
		Risk explained and its appreciation by man traced from earliest times through all the major figures of their ages in mathmatical circles.
	en.wikipedia.org /wiki/Risk (2342 words)

	This article and more available at Investopedia.com
		One examination of the relationship between portfolio returns and risk is the efficient frontier, a curve that is a part of the modern portfolio theory.
		Note that the modern portfolio theory and volatility are not the only means investors use to determine and analyze risk, which may be caused by many different factors in the market (see our risk tutorial for more on these different sources of risk).
		While standard deviation determines the volatility of a fund according to the disparity of its returns over a period of time, beta, another useful statistical measure, determines the volatility, or risk, of a fund in comparison to that of its index or benchmark.
	www.andrew.cmu.edu /user/carlyang/riskguide.asp (1678 words)

	Volatility Smile, Volatility Skew
		The pattern of implied volatilities forms a "smile" shape, which is called a volatility smile.
		In practice, either the term "volatility smile" or "volatility skew" (or simply skew) may be used to refer to the general phenomena of volatilities varying by strike.
		Indeed, you may even hear of "volatility smirks" or "volatility sneers", but such names are often as much whimsical as they are descriptive of any particular volatility pattern.
	www.riskglossary.com /articles/volatility_skew.htm (1532 words)

	Your attitude to investment risk and volatility
		It is possible for one investor to have many different attitudes to risk, depending on his or her objectives.
		Attitude to risk is normally expressed on a scale of 1 to 10.
		Volatility is a measurement of the change in price (fluctuations) over a given time period.
	www.offshore-library.com /attitudetorisk.htm (805 words)

	The Roller Coaster Market - On Volatility and Risk
		Volatility is considered the most accurate measure of risk and, by extension, of return, its flip side.
		Volatility is implicitly defined as the standard deviation of the yield of an asset.
		Volatility is especially high when both supply and demand are inelastic and liable to large, random shocks.
	samvak.tripod.com /volatility.html (1455 words)

	What You Don't Know Can Hurt You: Price Volatility and Hedging with Futures
		Insofar as the risk associated with a portfolio of hedged transactions is presumably lower than the risk associated with a portfolio of unhedged transactions, hedging risk through the use of derivatives is an important risk management function.
		Specifically, operation risk is mitigated through clear articulation of permissible activity, and the establishment of a strong risk management culture at the macro- (business-wide) and micro- (transaction) level.
		Insofar as risk management is concerned with extreme events that are not easily forecasted, the need for limits on all unhedged as well as hedged transactions in a portfolio is clear.
	www.riskworld.com /Nreports/2000/Tooman/NR00aa01.htm (2526 words)

	How Risk Is Measured
		However we are concerned with three distinct risks in investments: default risk, inflation risk and volatility risk.
		Volatility Risk is usually measured as Standard Deviation of monthly returns over a long period of history.
		Volatility Risk can be lessened through allocation of investments over what we call asset classes.
	www.northcentraltrust.com /investments/how_risk_measured.htm (550 words)

	Historical Volatility Curves for AMZN Share Prices
		Volatility is defined as the price range for a period, divided by the average price for the period:
		The Daily Volatility is obtained by dividing the daily range by the daily average.
		As the timespan across which Volatility is measured increases, the Volatility is expected to increase.
	www.hybridtechnical.net /volatility/AMZN.asp (436 words)

	Applying Partitioned Multiobjective Risk Method to Portfolio Selection
		On the other hand, portfolio risk is usually measured using the volatility, which is derived from the historical variance-covariance relationships among the portfolio assets.
		Volatility is justified for stable market performance but its weakness in addressing portfolio risk under aberrant market fluctuations warrants the need for a more robust metric of risk.
		A measure of an extreme portfolio risk, denoted by f4, is defined as the "conditional expectation" at a lower tail region of the distribution of the possible portfolio returns.
	www.riskworld.com /Abstract/2002/SRAam02/ab02aa252.htm (316 words)

	Risk
		There is also a popular board game named Risk (game), and Risk (album).
		If the risk negligable, it is often called a residual risk.
		The level of risk deemed 'Broadly Acceptable' has been considered by Regulatory bodies in various countries - an early attempt by UK government regulator and academic F. Farmer used the example of hill-walking and similar activities which have definable risks that people appear to find acceptable.
	www.brainyencyclopedia.com /encyclopedia/r/ri/risk.html (1878 words)

	Exchange Rate Volatility and Risk
		This is an example of the risk an importer faces because of a change in the currency value.
		A 2004 IMF study (Exchange Rate Volatility and Trade Flows - Some New Evidence, by Peter Clark, Natalia Tamirisa, and Shang-Jin Wei, May 2004) notes that on average, during the 1970s, 80s and 90s the volatility of fixed exchange rates was approximately the same as that of floating rates.
		The second thing noted by this study is that volatility had only a small effect on bilateral international trade flows suggesting that the choice of exchange rate system on trade flows may be insignificant.
	internationalecon.com /v1.0/Finance/ch110/F110-1.html (1395 words)

	Equity/Europe/pg1 (Site not responding. Last check: 2007-10-31)
		Volatility — in terms of daily published prices — is expected to continue increasing as the run-up to the end of the year further reduces liquidity and makes it increasingly difficult to trade.
		Reflecting recent high market volatility, options on blue-chip stocks, such as telecoms firms Vodafone and Orange, are trading at implied volatility levels close to 50%, compared with around 30% a year ago.
		Taking into account the high implied volatility, a cheaper bet would be to purchase far out-of-the-money calls, as a negative skew has developed (see figure 2).
	www.financewise.com /public/edit/riskm/equity/equity-volatility2.htm (1101 words)

	Short Term Risks associated with DJIA Price Volatility.
		Daily Volatility (the daily range as a portion of the daily average price) is plotted in green.
		Average Daily Volatility over the history of DJIA has been 2% in contrast to the Average Quarterly Volatility of 13%.
		However, as seen in this plot of the DJIA Volatility Curve, the increase is not constant.
	www.philmc.com /risk/DJIA.html (406 words)

	Volatility and Risk Are Key Issues for Traders. They Are Not the Same Thing.
		Volatility and risk are not the same thing.
		Nicole Meaden of TASS compared monthly standard deviations (volatility as measured from the mean) and semi-standard deviations (volatility measured on the downside only) and found that while Trend Followers experience a lot of volatility, it is concentrated on the upside, not the downside.
		The Sharpe ratio does not reveal whether volatility is on the plus or the minus side.
	www.turtletrader.com /risk-v-volatility.html (462 words)

	Risk Management -- FXtrek.com
		The volatility of a stock (or of a stock portfolio) is defined as the standard deviation of daily percent changes of the stock (portfolio) price.
		VAR depends on many factors, such the volatility of each stock, the correlation among all the stocks, and the stability of their historical relationships.
		By always recognizing risk limits in a trade by cutting losses when a stock is down 2%, then even if one loses ten times in a row, one still retains 80% of one's capital and can remain in the trading game.
	www.fxtrek.com /universityEN/risk_management.asp (1967 words)

	Risk Latte - VOLATILITY TODAY
		Estimating implied volatility with computer software is so commonplace that no trader even bothers to think about it even for a moment.
		If interest rates are at 3% then inputting the value of volatility (as estimated above) of 18.82% in the Black-Scholes formula for Call option we get the theoretical value of the $100 ATM call option as $4.12.
		Therefore, 16.92% is more or less the correct implied volatility of the 3 month $100 ATM call option that is being quoted in the market at $3.74.
	www.risklatte.com /volatilityToday/volatilityToday051021.php (452 words)

	Short Term Risks associated with IDNX Price Volatility.
		Blue is Weekly Volatility, which is the weekly range as a portion of the weekly average price.
		According to academic theory, Volatility is exactly equal to Risk.
		Average Daily Volatility over the history of IDNX has been 6% in contrast to the Average Quarterly Volatility of 53%.
	www.philmc.com /risk/IDNX.html (437 words)

	Risk and Diversification - The Different Types of Risk
		This type of risk is of particular concern to investors who hold bond's within their portfolio.
		Country Risk – This refers to the risk that a country won't be able to honor its financial commitments.
		Volatility is a measure of risk because it refers to the behavior, or “temperament,” of your investment rather than the reason for this behavior.
	www.investopedia.com /university/risk/risk2.asp (668 words)

	Corporate Finance
		Corporate finance is a specific area of finance dealing with the financial decisions corporations make and the tools as well as analyses used to make these decisions.
		Risk management is the process of measuring risk and then developing and implementing strategies to manage that risk.
		Financial risk management focuses on risks that can be managed ("hedged") using traded financial instruments (typically changes in commodity prices, interest rates, foreign exchange rates and stock prices).
	www.eoft.com /corporate_finance.html (2148 words)

	Introducing Power Price Volatility and Risk Management by Anne Ku at analyticalQ
		Without proper risk management, utilities are effectively passing the full impact of unpredictable power prices to the end user.
		It is an indication of level of risk, that the future will not turn out the way you expect.
		This is the risk that a buyer uses more or less than the original quantity bought, and the seller must supply more or less than the original amount sold.
	www.analyticalq.com /energy/volatility/default.htm (1967 words)

	Historical Analysis of MSFT Price Volatility
		For instance, on 9/8/2005 the average price was 26.7 with a range of 0.36, indicating a Daily Volatility of 1.3%.
		This is a different concept from the weekly average of daily volatility.
		During 19 years, the Average Quarterly Volatility of MSFT stock price has been 28% while the Average Daily Volatility has been 3%.
	www.hybridtechnical.net /volatility/MSFT.asp (383 words)

	risk and volatility (Site not responding. Last check: 2007-10-31)
		Anyway, what I'm saying is that adding a constant to the returns doesn't change the standard deviation and, in my opinion, that makes standard deviation a lousy measure of "risk".
		Standard deviation is just a convenient measure of how far returns deviate from their average.
		>But risk, defined as standard deviation, is financial techno-babble.
	www.gummy-stuff.org /risk-and-volatility.htm (313 words)

	Coping with Volatility
		The recent volatility in the markets may now make it apparent that there is too much risk in your portfolio.
		Nonmarket risk, also called specific risk, is the risk that events specific to a company or its industry will adversely affect the stock's price.
		Market risk, on the other hand, is the risk that a particular stock's price will be affected by overall stock market movements.
	financialtopics.com /SI/80491FJF.html (2723 words)

	Understanding Volatility Measurements
		Many websites provide various volatility measures for mutual funds free of charge; however, it can be hard to know not only what the figures mean but also how to analyze them.
		Note that the modern portfolio theory and volatility are not the only means investors use to determine and analyze risk, which may be caused by many different factors in the market (see the tutorial Risk and Diversification for more on these different sources of risk).
		The standard deviation essentially reports a fund's volatility, which indicates the tendency of the returns to rise or fall drastically in a short period of time.
	www.investopedia.com /articles/mutualfund/03/072303.asp (1753 words)

	BLOGWONKS: Risk Management, OPM, and Volatility
		Those not familiar with options should note that the risk profile of selling puts for income is identical to that of the buy/write covered-call strategy ("selling call options against stock you own") that Schaeffer was knocking in this statement.
		Another point in regard to volatility and risk is that when you use "other people's money" (OPM), you can do or say whatever you want without consequences.
		Hopefully, the public is now better educated about the volatility risks you mentioned.
	mensnewsdaily.com /blog/2005/07/risk-management-opm-and-volatility.htm (2036 words)

	Legal risk - Wikipedia, the free encyclopedia
		Legal and regulatory risk: Sometimes governments change the law in a way that adversely affects a bank's position.
		The Risk Principle is an area of law closely tied to legal causation in negligence.
		It provides limits on negligentty for harm caused unforeseeably.
	en.wikipedia.org /wiki/Legal_risk (74 words)

	Sun.Star Cebu - Bank exec to investors: Do hedge, avoid volatility risk
		Managers of mutual funds hedge their exposure to currency or interest rate risk by buying or selling futures or options contracts.
		A futures contract is an agreement to buy or sell a specific amount of a commodity or financial instrument at a particular price on a stipulated future date.
		It also allows you not to have the volatility of foreign exchange exposure,” he said.
	www.sunstar.com.ph /static/ceb/2006/01/30/bus/bank.exec.to.investors.do.hedge.avoid.volatility.risk.html (397 words)

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