Volatility

Volatility measures how much an investment’s returns or market price fluctuate. It describes variation, not the direction of future returns.

A simple example

Two securities can have the same average return while one experiences much wider price swings.

Why this matters to income investors

Greater volatility can produce larger short-term gains or losses and can affect option prices, portfolio drawdowns, and investor behavior.

How to use volatility in your research

Check the period and method used. Do not treat low historical volatility as proof of low credit, liquidity, or permanent-loss risk.

This material is general education and information, not individualized investment, tax, or legal advice.