How to Calculate Volatility of a Stock

Calculate an asset's potential for value changes based on historical performance.

By Rachel Warren – Updated Jun 24, 2025 at 12:22 PM | Fact-checked by Frank Bass

Key Points

Use Excel to calculate daily returns and standard deviation to gauge stock volatility.
Annualize volatility by multiplying daily standard deviation by the square root of 252.
Remember, standard deviation assumes normal distribution, which may not always apply.

Volatility is troublesome for many investors. Value changes in your stocks, your portfolio, or an index can keep you up at night -- or worse, push you to make emotional decisions you later regret. Understanding an asset's potential for volatility by way of a few calculations can help you keep a level head when stock prices falter.

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Stock charts showing volatility. — Image source: Getty Images.

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Calculations for index volatility in Excel. — Chart by author.

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About the Author

Rachel Warren is a contributing Motley Fool stock market analyst covering pharmaceuticals, biotechnology, medical devices, information technology, and consumer goods. Prior to The Motley Fool, Rachel was a paralegal and legal administrator. She holds a bachelor’s degree in paralegal studies from Liberty University School of Law.

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Rachel Warren has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.