The main tool used to calculate stock volatality is called beta.The beta of an investment compares it to the index movement as a relative measure of risk.
A positive beta means that the stock & the index have moved in the same direction. A beta of 1 for instance means that the stock has moved exactly 1% for 1% move in the index. A beta of minus 1 means that it has moved exactly that amount in the opposite direction.
A beta of less than 1 means that it is less volatile than the market while a beta greater than 1 means that it is more volatile. A beta of +0.50 for instance, would indicate that on an average , the investments returns move half as much as the markets do in the same direction.High beta stocks are the ones most sensitive to market volatality.
