BacktestFolio · Glossary
Volatility
In plain language
Measures how much returns fluctuate over time. High volatility means sharp rises and falls; low volatility indicates a smoother path. It is not synonymous with permanent loss, but signals the instability of the journey.
Technical definition
Annualised standard deviation of portfolio returns, calculated on full-calendar-month returns (month-end to month-end) over the whole period and multiplied by the square root of 12.