Tell me about stock volitility and price movement
 

I am looking to learn more about which stocks are prone to short term price swings, and why. I am just now getting into traditional stock investing, and it's a large difference from the TA Approach I took to commodities. Any help is of course appreciated. How can I find out which stocks move the most?

Re: Tell me about stock volitility and price movement
 

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I am looking to learn more about which stocks are prone to short term price swings, and why. I am just now getting into traditional stock investing, and it's a large difference from the TA Approach I took to commodities. Any help is of course appreciated. How can I find out which stocks move the most?

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the first step is finding out which stocks have moved the most. or which sectors...

typically, while historical volatility isn't a good guess as to future volatility (because the 2nd moment never converges so, as a result, the root of the 2nd moment doesn't converge), it does give you a sense of which stocks are volatile. this was summed up in a variable called beta.

beta is the degree to which the given stock has moved in the past vs. the mkt (typically the S&P500). so a high beta signifies that the stock is "riskier" or moves more than the market, and a low beta signifies the reverse.

a beta of 1 indicates that the stock is just as volatile as the market. typically, beta is expected to be bounded by 0 and some large # but most are not higher than 10 (that would be sick).

anyways, instead of figuring out which stock prices move the most (since you'd have to give them a lower dollar weight in your portfolio to compensate), why not figure out which sectors you are most passionate about and research those sectors. then from there figure out which stocks you like and which ones you don't relative to that sector.

Barron

Re: Tell me about stock volitility and price movement
 

thanks a ton, dcifr, I had no idea it was THAT complicated, but I am sure I am missing something, because historically speaking that has been the case - I tend to overcomplicate things.

Post deleted by Ryan Beal
 

Re: Tell me about stock volitility and price movement
 

There are many easy to read books on the market(library) that are tremendous for investing in the stock market.......not to mention other areas of financial interest. Stop by your local library and browse the financial section.

Re: Tell me about stock volitility and price movement
 

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I am looking to learn more about which stocks are prone to short term price swings, and why. I am just now getting into traditional stock investing, and it's a large difference from the TA Approach I took to commodities. Any help is of course appreciated. How can I find out which stocks move the most?

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Which stocks move the most? Ah, you are about to venture into the seedy world of stock manipulation. It is also one of the most profitable areas of the market.

Re: Tell me about stock volitility and price movement
 

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beta is the degree to which the given stock has moved in the past vs. the mkt (typically the S&P500). so a high beta signifies that the stock is "riskier" or moves more than the market, and a low beta signifies the reverse.

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Barron,
What would beta be for a hugely volatile stock whose returns were orthogonal to the market's return?

Re: Tell me about stock volitility and price movement
 

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beta is the degree to which the given stock has moved in the past vs. the mkt (typically the S&P500). so a high beta signifies that the stock is "riskier" or moves more than the market, and a low beta signifies the reverse.

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Barron,
What would beta be for a hugely volatile stock whose returns were orthogonal to the market's return?

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If they were exactly orthogonal, beta would be 0. This is the problem with beta, it measures correlation to market movements. If it moves 2x for every 1x market movement, then beta would be 2. But it would have to correlate with the market well. It could still be very swingy and just not correlate with the market and then have a low beta. That would give you the false assumption it wasnt volatile.

Re: Tell me about stock volitility and price movement
 

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beta is the degree to which the given stock has moved in the past vs. the mkt (typically the S&P500). so a high beta signifies that the stock is "riskier" or moves more than the market, and a low beta signifies the reverse.

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Barron,
What would beta be for a hugely volatile stock whose returns were orthogonal to the market's return?

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If they were exactly orthogonal, beta would be 0. This is the problem with beta, it measures correlation to market movements. If it moves 2x for every 1x market movement, then beta would be 2. But it would have to correlate with the market well. It could still be very swingy and just not correlate with the market and then have a low beta. That would give you the false assumption it wasnt volatile.

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yea, plus i don't analyze stocks... or anything in that sense. asking what is orthagonal just isn't the qusetion i go with.

more like top down and seeing what jumps out at me as possible areas for further analysis and transformation into a trade idea and eventually a trade.

Barron

Re: Tell me about stock volitility and price movement
 

spino1i,
exactly.