Volatility Index Methodology

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Coefficient of variation methodology for rate volatility over a window.

Definition

Volatility index uses coefficient of variation (stdev/mean) of monthly rates over a consistent window.

Steps

  1. Filter to window (e.g. last 5 years monthly).
  2. Compute mean and standard deviation.
  3. volatilityPct = (stdev / mean) * 100.

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