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
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