Question

In: Finance

explain the volatility of the 2019 year to now in stocks

explain the volatility of the 2019 year to now in stocks

Solutions

Expert Solution

In the year 2019,the volatility of the stock market have been comparitively low as the stock market have been on a upward momentum and there have been lack of uncertainty for volatile swings in the market.The relative performance of the volatility can be seen through a flatter vix (volatility index) apart from one or two instances of trade war related worries and uncertainty there wasn't much to cause high volatility swings.

Since the late 2019 with the upsurge of Coronavirus pandemic the uncertainty took the central stage and the volatility was back in action.There have been wild ruthless swings that caused panic in the worldwide market .It was triggered by fears amid COVID 19 concerns.

In February 2020 global stock markets started to give up yearly gains as the concerns were getting worsened.The volatility went up on decades high and continue to hit fresh highs as countries started to announce lockdown,the cases surged and industries were shut down.

There have been a wide speculation of an impending recession and that provided a way for surge in volatility.There has always been an inverse relationship between volatility index and stock market indices.When volatility goes up ,the relative bulishness of stock market comes down and vice versa.

So overall we can say that with the current environment of clouds of uncertainty hovering over stock market the volatility is here to stay till there is no permanent solution to counter this pandemic.


Related Solutions

Arbor Systems and Gencore stocks both have a volatility of 39 %. Compute the volatility of...
Arbor Systems and Gencore stocks both have a volatility of 39 %. Compute the volatility of a portfolio with 50 % invested in each stock if the correlation between the stocks is ​(a​) plus 1.00​, ​(b​) 0.50​, ​(c​) 0.00​, ​(d​) negative 0.50​, and ​(e​) negative 1.00. In which of the cases is the volatility lower than that of the original​ stocks?
The random variable X represents the volatility of stocks in the S&P 500. The pdf of...
The random variable X represents the volatility of stocks in the S&P 500. The pdf of X is suspected to have the form: f(x) = 4cxe^-(cx)^2, x > 0 Determine the value(s) of c so that the above function a valid probability density function
Explain in your own words why volatility "smiles". If the volatility of a stock grows indefinitely,...
Explain in your own words why volatility "smiles". If the volatility of a stock grows indefinitely, what will happen to the delta of the call option? What will happen to the delta of the put option? Justify.
Consider the following two, completely separate, economies. The expected return and volatility of all stocks in...
Consider the following two, completely separate, economies. The expected return and volatility of all stocks in both economies is the same. In the first economy, all stocks move together – in good times all prices rise together and in bad times they all fall together. In the second economy, stock returns are independent – one stock increasing in price has no effect on the prices of other stocks. Assuming you are risk-averse, and you could choose one of the two...
Explain what would be the most effective policy for U.S. economy right now in 2019 (fiscal...
Explain what would be the most effective policy for U.S. economy right now in 2019 (fiscal and monetary) and how it would be effective. Now, if the economy is in a recession, analyze the role of using fiscal and monetary policy to help stabilize the economy.
Suppose volatility of the stock market is 20%. Suppose I always short stocks. What would be...
Suppose volatility of the stock market is 20%. Suppose I always short stocks. What would be the volatility of the return of my strategy?
Which one of the following had the greatest volatility for the period 1926-2012? large-company stocks a....
Which one of the following had the greatest volatility for the period 1926-2012? large-company stocks a. U.S. Treasury bills b. long-term government bonds c. small-company stocks d. long-term corporate bonds For the period 1926-2015, long-term government bonds had an average return that ________ the average return on long-term corporate bonds while having a standard deviation that ________ the standard deviation of the long-term corporate bonds. a. exceeded; was less than b. exceeded; equaled c. exceeded; exceeded d. was less than;...
Consider a portfolio consisting of the following three stocks: Portfolio Weight Volatility Correlation with Market Portfolio...
Consider a portfolio consisting of the following three stocks: Portfolio Weight Volatility Correlation with Market Portfolio HEC Corp 0.26 13% 0.35 Green Midget 0.29 28% 0.52 Alive And Well 0.45 11% 0.54 The volatility of the market portfolio is 10% and it has an expected return of 8%. The risk-free rate is 3%. Compute the beta and expected return of each stock. Using your answer from part (a), calculate the expected return of the portfolio. What is the beta of...
What are the best 10 stocks to buy (right now) and why?
What are the best 10 stocks to buy (right now) and why?
1) Suppose volatility of the stock market is 20%. Suppose I always short stocks. What would...
1) Suppose volatility of the stock market is 20%. Suppose I always short stocks. What would be the volatility of the return of my strategy? (Please answer in percent. For instance, if your answer is -5%, answer -5 below) 2) Suppose a fund achieves an average return of 10%. Assume that risk-free rate is 0% and market risk premium is 10%, and this fund has a beta of 1.5. What is the alpha of this fund? (Answer in percent. For...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT