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# How to Calculate Monthly Return Volatility for a Stock

Original post by Shula Asher Silberstein of Demand Media

The volatility of a stock is an important measure to consider if you want to invest in the stock market. If a stock's value is unstable -- in other words, if the stock keeps going up and down -- you aren't guaranteed much of a return on your investment. To determine whether a stock is a good investment, check its history. Stocks with several years of stable value or ever-increasing value are usually better investments than stocks that continually change in value.

## Contents

### Step 1

Check the stock's records for the past several years. Write down the stock's monthly return on its investments for at least the past three years.

### Step 3

Calculate the standard deviation for each month's return on its investment. This is that month's volatility.

### Step 4

Multiply the monthly volatility for each month by the square root of 12, or 3.46, to determine the annual volatility for the stock.

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### Things Needed

• Stock reports
• Calculator