Getting started

Feature Walkthrough

How-to: Company Pages

How to: Discovery

How-to: Portfolio Holdings

How to: Activity

How to: Leaderboard

How to: Performance

How to: Challenges

How to Trade

What are some basic Financial Vocabulary?

How to get recruited using EquitySim

Fixing Account Errors

My Trade is not being processed

An investment in my portfolio is showing up as $0

Stock splits, mergers + acquisitions

I can't find a specific investment

I can't sign-up

My credit card is being declined

Learning Material

What is a Stock?

How to Choose a Stock

Active Trading vs Portfolio Management

How to start testing multiple strategies

What is Portfolio Management Strategy?

How to Build a Basic ETF Portfolio

What is an ETF?

How to Choose ETFs

What is a Bond?

What is an Option?

What are Trading Strategies?

What is short selling?

Understanding Metrics / Data

Diversification Score

What is Diversification?

What is the Diversification Score?

What are asset-classes?

What is Geopolitical Exposure?

What is Industry Diversification?

What is Geographical Diversification?

What is Industry Exposure?

How do I read the Diversification Radar Chart?

How to read impact on diversification

Sharpe Ratio

What is a good Sharpe Ratio?

What is Sharpe Ratio?

What are average excess returns?

How to Improve Sharpe Ratio

How do I measure risk?

What is Return?

What is Volatility?

Challenge Metrics

Credit-Suisse Investment Challenge

Recording your Strategies and Rationales

Showcasing your work on EquitySim

Adding structure to your interview answers

Preparing for the interview

Preparing for the Sales + Trading Interview

Credit-Suisse: 2019 Case Study

2019 Credit Suisse Investment Challenge [Fall]

2020 Credit Suisse Investment Challenge [Fall]

2020 Credit Suisse Investment Challenge [Summer]

Host your own EquitySim Challenge

Instructor Integrations

Organizer On-boarding

Syllabus Integration

Can users share an account?

How do I export classroom data?

How do I delete, archive and edit my class?

Challenge Setting Types

Learning Challenge

How does EquitySim compare to other simulations?

Other FAQ

What is EquitySim?

Can I undo a trade?

How are prices determined in the simulation?

Why didn't my trade execute immediately?

How do I exchange currency?

Why isn't my ranking showing up?

What are Public Portfolios?

How do I switch between portfolios?

How am I Graded?

Does EquitySim have sample assignments for my curriculum?

How are Options priced in the simulation?

How do I find my daily portfolio change?

How do the Portfolio Emails Work?

Is my data confidential?

How do I delete my account?

Referral Program

How our simulations reflect the real-world

What can I trade on EquitySim?

Referral Bonuses

What is a good rationale?

How to set-up your team

What are the different order types?

Which government bonds can I trade?

- All Categories
- Understanding Metrics / Data
- Sharpe Ratio
- What is Volatility?

# What is Volatility?

Volatility measures how much the returns of your portfolio fluctuate on a daily basis. You want to try to **minimize the volatility of your portfolio **to demonstrate you can make consistent returns.

#### The Math Behind Volatility

At the end of each day, we log that day's return and compare them to all of your other day's returns. The more these numbers vary the higher your volatility is.

Volatility is calculated by taking the** Standard Deviation **of your daily returns.

*Example*

Day 1 returns: 1%

Day 2 return: 3%

Day 3 returns: -3%

Day 4 returns: 0.50%

Day 5 returns: -2%

You can use Excel or Google sheets to calculate the Standard deviation of this set of numbers.

Standard Deviation of (1%,3%,-3%,0.5%,-2%) = Volatility = 2.41%

#### What is Standard Deviation?

Standard deviation measures the amount of variation in a set of values, (in volatility these values are your daily return rates).

Standard Deviation will take all of your daily return rates as inputs, and determine 3 buckets of variation. Each variation bucket is known as a standard deviation, notated with the symbol "sigma": **σ. **

Each bucket is named 1**σ, 2σ, 3σ. **On the spectrum, the middle is your mean (average). ** **

The curve fits all your data points, the wider the range, the higher the volatility.

*Example*

If σ = 1.5% , and the mean (average) is = 0.5% ; +1σ = 2% and -1σ = -1%.

This means approximately 68.2% of the time your daily returns are between -1% and +2%**. **

**Tips to Keep in Mind:**

**Tip#1.** You don't need to thoroughly understand the math to minimize your volatility, but learning basic statistics through a few Youtube videos will give you a clearer understanding of visualizing volatility.

**Tip#2.** Volatility is about generating consistent returns every day. Set reasonable return goals that you can achieve think you can achieve every day.

**Tip#3.** Create rules of when to sell, and stay disciplined. If you can manage the upper bound and lower bound of your returns, you can manage your volatility.

#### Performance Goals:

While generally the lower the volatility the better, you need to generate a certain amount of volatility in order to generate returns.

**To have a volatility score, the volatility of your portfolio must be greater than 1%. **