volatility forecasting

Volatility forecasting involves predicting the future fluctuations in the price of an asset, such as a stock or currency. It helps investors understand how much prices might vary over a certain period, which is essential for managing risk and making informed decisions. Financial models analyze past price movements and market data to estimate how unpredictable or stable prices are likely to be soon. Accurate volatility forecasts enable better risk management, pricing of financial instruments, and investment strategies, serving as a critical tool for professionals to navigate uncertain markets effectively.