Market variance, also known as market volatility, is a statistical measure that represents the degree of variation in the prices of financial assets or securities over a given period of time. It is often measured using the standard deviation of the returns of an asset or a portfolio of assets.
Higher market variance indicates that prices are fluctuating more widely, while lower variance indicates that prices are more stable. Market variance can be caused by a variety of factors, including economic conditions, political events, and market sentiment.
Market variance is an important consideration for investors, as it can impact the risk and return of an investment. High variance can indicate higher risk, but it can also present opportunities for profit through volatility trading strategies. Lower variance may be preferred by some investors who prioritize stability and predictability over potential returns.
