The characteristic of a security or market to fall or rise sharply in price in a short-term period. A measure of the relative volatility of a security or mutual fund to the overall market is beta. A stock may be volatile because the outlook for the company is particularly uncertain, because there are only a few shares outstanding (i.e., it’s illiquid) or because of various other reasons. See "Beta." While beta can apply to both stocks and funds, standard deviation is more widely used to measure the volatility of mutual funds. Standard deviation examines a fund's range of historical returns, thus determining a portfolio's potential to swing between high and low returns. See "Standard Deviation."