This is the extent to which an asset prices rises and falls and also the speed with which it does so.

As such it is a way of describing the price risk associated with that asset. As a rule of thumb the higher the volatility of an asset the greater the returns an investor should expect to earn from that asset. There are several ways of measuring volatility. One way to mitigate volatility as an investor is to spread your cash over several asset classes and to then diversify within each asset class. For example someone who owns shares should ideally look to own 15-20 as a minimum to reduce the impact of single stock volatility on their portfolio.

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