Think: up down, up down...the waves and troughs of the sea or those heart beepy things in the hospital that show the patient is in fact, still living. Or you can think of a bed on The Bachelor, if you are so inclined.
When measuring the amplitude of a stock, you are measuring its volatility. So you would calculate the difference in price from the midpoint of a trough (low point) to the midpoint of a peak (the highest price) in a specific period of time. The larger the amplitude in either direction, the more volatile, i.e., riskier, the security is considered to be.
Amplitude is also used to measure the direction of a country’s gross domestic product. The United States hit a major trough during the Great Recession starting in 2008, with the economy beginning to show signs of life in 2010. A trough would show the lowest point during a depression right before the economy starts to improve.
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Finance: What is Volatility?77 Views
In finance allah shmoop what is volatility beta this thing
that's the symbol for volatility on the street we mean
the wall one not the mean one and it is
so commonly used that the in crowd members just say
beta when they're referring to volatility unless they're from tennessee
in which case they say you ve all y'all all
right so here's a siri's of stock prices stamped each
day that has lo ve all or low beta and
here's a siri's that has high beta dead man's pulse
versus rocky mountains Well what makes a stock volatile uncertainty
Think about it this way If everyone knew for sure
what a given stocks earnings would be for the next
ten years quarter by quarter and they also knew what
the overall markets average earnings would be in a few
other things like revenue growth and world conditions and we're
going to be war inflation there wouldn't be a lot
of guesswork The quote right unquote price today would be
thirty two dollars eighty three cents and the quote right
unquote rate of compounding would be eight percent in the
stock would slowly go up but this rate but in
non disney land riel life well nobody really knows much
of anything So stockcharts look like this and nerve endings
of wall street traders look like this Neither of them 00:01:19.771 --> [endTime] looked much like this chart So that's all you
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What is Beta? Beta is a figure associated with public companies that measures how risky the company’s stock is in comparison to the market as a w...