What does volatility mean?
Volatility means the quality of being liable to rapid and often unpredictable change. The word is especially familiar in financial contexts, where it describes how widely and frequently the price of a stock, currency, commodity, or other asset rises and falls. In politics, society, and personal life, it can refer more generally to instability, uncertainty, or sudden shifts in circumstances. Volatility is therefore more intense than ordinary variation: something volatile may change dramatically from one moment to the next, making plans and assessments difficult. The term is usually formal, but it is widely understood because it names a central feature of modern markets and public life. It can be both attractive and troublesome: volatile environments can create opportunities for quick gains or dramatic losses, while also making stability and long-term planning difficult. The related adjective “volatile” describes a substance that evaporates easily or, figuratively, a situation or person prone to sudden change.
nounThe quality of being subject to rapid, often unpredictable, change or fluctuation. In finance, it refers especially to the extent to which the price or value of a market, asset, or currency varies over time.
- The quality of being subject to rapid, often unpredictable, change or fluctuation.
- The degree to which the price or value of a market, asset, or currency varies over time.
"The volatility of oil prices has forced many companies to reconsider their long-term plans."
"The report warns that continued political volatility could undermine investor confidence."
"Short-term volatility in the markets made the share price difficult to predict."
The plural is grammatically standard but uncommon because the word is usually used as an uncountable noun in the singular.
"The volatilities of different markets were compared in the annual report."
Volatility comes from the Latin word for “flying”: a volatile substance rises and vanishes quickly, and a volatile market can change direction just as abruptly.
Reviewed by Deb Chak, Editor. AI-assisted content curated by RJS Tech Solutions LLP.
Where does volatility come from?
Volatility comes from the Latin noun volatilitas, meaning “the quality of being flying, mobile, or transient.” It is derived from volatilis, “flying,” “volatile,” or “changeable,” which in turn comes from volare, “to fly.” The word entered English in the early 17th century and initially referred especially to the tendency of substances to vaporize or pass into the air. Its modern financial and figurative senses developed from the idea of something that moves, changes, or escapes quickly.
Related word forms
How volatility is actually used
The word is formal and especially common in finance, economics, politics, and discussions of personal or social conditions. In general use, it often suggests instability combined with a rapid or unpredictable element, whereas “variability” can describe change that is regular or systematic.