Two investments can earn the same average return. One inches up steadily; the other lurches up and down. The second is riskier, even though the average matches.
Modern investing started treating risk as the spread of returns — measured by variance, or its square root — back in the 1950s.[1]
Two drives to work both take 30 minutes on average. One is always 28–32 minutes; the other swings from 10 to 60. You’d trust the steady one to catch a flight.
Volatility isn’t the whole story — it treats big gains and big losses the same. But it’s a fast, honest way to compare how bumpy two things are.
Where these numbers come from
Finisdom measures volatility from the real daily price history of what you own, then shows it as a single “how bumpy” number.