Top Volatile Stocks Frequently Asked Questions
What are the most volatile stocks?
Volatility of any stock is determined by fluctuation in its price in a given frame of time. Most volatile stocks can indicate fluctuations in price in a day of as much as over hundred percent. In a market that is developed already, the volatility remains low, and may not exceed past 20-30% in slow periods. Fluctuation in stock price doesn’t seem obvious when you look at the stocks which are priced below $1. To spot fluctuations, you must see change in price in percentage.
Why is stock volatility important?
Volatility is primarily statistical measure, which is used to understand the range of stock return or return of market index. This volatility is measured in the form of deviation through variance between returns. Stock volatility should be seen as a pendulum. It is equal to that amount which a stock separates from its mean price (known as original price).
Is it wise to invest in most volatile stocks?
Remember volatility is for those who are active investors. One of the best things about the most volatile stocks is that volatility is a measurable parameter. Therefore, it is feasible to act upon it strategically. Since the risk is high, therefore comparatively the returns can be high as well. One of the best parts of most volatile stocks is their obvious upside benefits, which are comparatively higher than simpler long positioned stocks that you hold for longer duration in your portfolio.
Which sectors have the most volatile stocks?
Stock market sectors have a personality of their own. Some sectors remain generally volatile. There are stocks in these sectors which bounce like yo-yo over a short period of time. The most volatile stocks mostly belong to these sectors- energy, commodities, financial, technology, consumer discretionary, communication services, health care and utilities.
What is the reason for stock volatility?
There can be various factors which affect stock volatility. Among them the major ones include trader emotions, such as panic and fear. This is also known as noise trader risk. These are the risk factors which are adjoined with traders who give in to emotions and cause gargantuan sell offs or stock purchase. Other factors which cause a stock to fall in the category of most volatile include major events, uncertain market, positive and negative political scenario in a country and so on. These factors can create a trend of high volatile stocks, which moves their share price up or down. Apart from these factors, scenarios like pandemic, inflation, depression, recession, political unrest, strikes, famines, droughts, revolutions and wars can be a cause of high volatile stock.
Can private equity and hedge funds cause high stock volatility?
Hedge funds, as well as private equity firms can stir stock volatility. Sometimes these organizations may be under huge amounts of debt which is incurred because of financing stock market investments. Due to this reason, they may be forced to make a sell off of their assets in markets which are declining. Large-lot sales of stocks can create big changes in price of a stock.
How is stock volatility calculated?
Standard deviation method is used for mathematical calculation of investment volatility.
What should a prospective investor understand about most volatile stocks?
A prospective investor must understand that high volatile stocks have riskier security. In simple terms, volatile market means that the stock market is falling and rising over 1% in a sustained time period.
How should I handle most volatile stocks?
There are some strategies that you can use to handle your most volatile stocks. These include- not to abandon the plan, staying invested in the high volatile stocks, staying diversified, making sure to take an active risk management approach, and finally, having a good financial professional to guide you through.
Why do traders seek high volatile stocks despite high risk?
Most volatile stocks are the favourites among active traders who often take advantage of strategies with short-term momentum, and intra-day price action.
How should I find the most volatile stocks?
In order to search for the high volatile stocks, you don’t need to worry a lot. This isn’t a complex process. You can simply run stock screen meant for those stocks which remain consistently volatile. Another important factor to consider here is the volume of stocks. You can use some apps or websites which are used as filters to track high volatile stocks.
