FinShiksha - Calculating Annualized Standard Deviation from Stock Prices

This video shows how to calculate annualized volatility (Standard Deviation) for any asset class using the example of L&T as a stock.

-------------------------------------------------------------------------------
Follow us on
---------------------------------------
FinShiksha is an IIM Calcutta alumnus venture and specializes in education in the financial services domain.

But we are more than just education providers; we help you build a career – and work with you during the process. Our programs help a candidate evaluate his/her strengths and hone them, at the same time spotting weaknesses and eliminate them. We teach, we hand-hold and we guide.

[kaustavsen]

9 years later, still serving students across the globe. Thanks a ton for the on point video.

[laurentiu]

Useful, correct but too long. There's a shortcut - i.e. you can avoid the variance calculation by simply multiplying the Daily Standard Deviation with the square root of time period. So in above example just take the StDev of 2.2% and multiply it with SQRT of 250 and you'll get the same result for annualized StDev of 35%. Similarly to get the annualized StDev from a monthly series, you compute the monthly StDev as shown in the video and then multiply it with Sqrt of 12 (as there are 12 months in an year, doh).
Cheers!

[jeenthomas]

Thanks a million for this precise, to the point video. You're a life saver!

[KennTollens]

Thank you for the very simple step by step explanation to get volatility. I am trying to get the Sharpe Ratio and everyone else glosses over how to get this number.

[nunolopes]

That was really hellpfull, finally understood something that has been bugging me for a while. Thank you.

[TheAndelumut]

Very Helpful, simple and comprehensive! Thank you!

[keysky]

Thank you, bro !!! solving my project problem!!!

[managedbywhitney]

1:28 start here: standard deviation moving into daily variance

[MrDbigballs]

Thank you! Really clear and straight forward. 

[andreaboul]

if you were calculating 2 year annualized volatility, when performing the calculations would you simply double the number of trading days from 250 to 500?

[santamkafle]

thank you. this helped me to do my research

[javierloa]

If you wanted to annualize the average daily return, would you raise by 365 (like most books) or use 252 trading days?

[Atinderbal]

Thanks for the video. I have a question! If the given data is monthly for 2 year, what will be annualized variance?
is it Square of Monthly Standard Deviation X Number of months (12) X Number of years (2)?

Also any video tutorials to Annualizing Monthly Returns?

[solipsist]

can the same be done for monthly returns?

[atmanirbhartrader]

hi, video is good but I've a doubt. where does this 35% fit in 1 standard deviation and 2 standard deviations, i.e 68.3 and 95% respectively. how to interpret that.

[meerathomas]

If the data is of more than 1 year say for example 5 years what should be please explain...

[hasanejaz]

PLEASE HOW DO we calculate average annual return from monthly returns?/

[firstnamelastname]

Sir I have annual return of 10 years calculated and it's standard deviation, I want to calculate pearson correlation coefficient, so can I just divide the std deviation by 10 and use it as x score for each year to calculate correlation?

[nityekhoobchandani]

Using the formula for returns my value doesn't comes in percent

[ddenis]

Hey, if i calculate daily volatility using like 10 years of data....when i get standard deviation is this average daily volatility over period of 10 years then ? If i get for example 5%, do I say that the average daily volatily over period of 10 years is 5 % or do i just say it without "average", just that daily volatility over period of 10 years is 5%. I want to calcualte average daily volatility and i don't know if thats the same. Thanks