Please wait…

02/01/2019 15:02:53
A A | Print

Börse Frankfurt News

Glossary term of the week: Volatility

Brexit, import tariffs and economic regression are, among other things, the breeding ground for the expected volatility on the securities markets in 2019. Even if expectations differ widely about the direction, most market commentators agree that it will be rough this year and price shaking will continue to increase. Reason for the stock market word of the week.
2 January 2019. FRANKFURT (Börse Frankfurt). Volatility measures the intensity of the fluctuations of a security price or an index around its own average.

The higher the volatility, the higher the deviation, for example, of the share price from its average value. While the historical volatility refers to the fluctuation strength in the past, the implicit volatility measures the expected future fluctuation strength.

How does volatility arise?

In addition to long-term price trends, volatility is a point-by-point phenomenon. The main drivers are changes in the opinions of traders and investors. All players react to uncertainties such as the events mentioned above or unexpected news according to their own expectations, trade directly or adjust price targets and limits.

What does volatility mean?

Volatility is a risk indicator. It brings uncertainty for some, but opportunities for others.

Volatility is considered to be a major impellent for the German savings mentality, and the fact that it cannot be sustained is regarded as one of the reasons for the stock aversion here. And professional investors react with hedges to higher price fluctuations. But one person's suffering is another's joy.

Volatility sets the market in motion. Professional traders need deviations for entry and exit. Only volatility offers short-term traders opportunities - in both directions.

VDAX-New 2003-2018


How do you measure volatility?

For historical volatility, the so-called standard deviation, the fluctuation of real values around a calculated moving average value, which can be represented as a curve or straight line, applies. Technical key figures are based on historical volatility.

Implicit volatility has now established itself in the market. It is based on the option prices and reflects the expectations that prevail in the market. The expected price fluctuations for all major markets are mapped in indices. The VDAX-New, for example, reflects the implied volatility of DAX shares over a 30-day period, the VSTOXX for the Euro Stoxx 50 and the VIX for the S&P 500.

Volatility is expressed in percent. A value of the VDAX-New of 20 percent means, for example, that market participants expect fluctuations of 20 percent around the DAX average over the next four weeks.

What is normal, low or high volatility?

Which volatility is regarded as "normal" is a purely mathematical value and also depends strongly on the period in view. In recent years, the volatility of German equities has mostly been below 20 percent, but at the start of the stock market year 2019, the VDAX-NEW stood at 24 percent. Looking back a few decades, European stock markets show a typical volatility of 20 to 30 percent, US stock markets 15 to 25 percent.

Further information

2 January 2019, © Deutsche Börse AG


Login required

Username or email:

To use this function please log-in
If you haven't got an account on, you have the opportunity to register regist here for free.

add instrument


The following Disclaimer and Information has been prepared by Voltabox AG (the “Issuer”) for the purpose of publishing THE securities prospectus by the issuer. Deutsche Boerse AG does not assume any responsibility for the content of the issuer`s Disclaimer and information.


Important Information


The information contained on the following web pages is directed only at persons who are resident of or domiciled in the Federal Republic of Germany (“Germany”) or the Grand Duchy of Luxembourg (“Luxembourg”). The following information does not constitute an offer to sell or a solicitation of an offer to buy or subscribe for any securities. No offer of securities of the Issuer is being, or will be, made to the public outside Germany and Luxembourg. The offer in Germany and Luxembourg is being made solely on the basis of the securities prospectus (including any amendments thereto) which has been approved by the German Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and which has been published on the Issuer’s website. Any investment decision regarding the publicly offered securities of the Issuer should only be made on the basis of the securities prospectus. The securities prospectus is available free of charge from the Issuer (Artegastraße 1, 33129 Delbrück, Germany; Tel.: +49 (0)5250 9930-900; Fax: +49 (0)5250 9762-102) and on the Issuer’s website (

The information contained on the following web pages is not an offer of securities for sale or a solicitation of an offer to purchase securities in the United States of America (“United States”), Canada, Australia or Japan. The Issuer’s shares, and the securities offered in the course of the offer, have not been and will not be registered under the US Securities Act of 1933, as amended (“Securities Act”), or with any other securities regulatory authority of any state or other jurisdiction of the United States and may not be offered, sold or delivered within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Issuer does not intend to register the offer or parts thereof in the United States or make an offer to the public in the United States, Canada, Australia or Japan.

The information contained on the following web pages is not for distribution to persons who are located in the United States, Canada, Australia or Japan or any other jurisdiction where the offer of the securities to the public is not taking place. Any violation of these restrictions may constitute a breach of the securities laws of these countries. The copying, forwarding or other transmission of the content of the following web pages is prohibited.

By clicking the "I AGREE" button below, you warrant that (i) you have read and accepted the foregoing information and restrictions in full and (ii) you are a resident of or domiciled in Germany or Luxembourg, and (iii) you agree not to distribute or forward the information contained on the following web pages to any person who is not a resident of or domiciled in Germany or Luxembourg.


We regret that, due to regulatory restrictions, we are unable to provide you with access to the following web pages.