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Historical Volatility (HV)

Historical volatility (HV) is a fundamental statistical concept in financial markets that measures the degree of variation in an asset's trading price over a specific time period. Unlike implied volatility, which reflects market expectations of future price movements, HV is calculated using actual past price data.

It measures how far a price moves away from its mean value.

A price chart above and its daily log returns as bars below, with dashed lines at one standard deviation above and below zero. The annualized figure is that standard deviation times the square root of 252.
Historical volatility is the standard deviation of past log returns, annualized.

Historical volatility is typically calculated as the standard deviation of logarithmic returns of an asset over a defined period, then annualized for comparison purposes.

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