Historical volatility is the measure of a stock’s price movement based on historical prices.
It measures how active a stock price typically is over a certain period of time.
Usually, historical volatility is measured by taking the daily (percentage price changes in a stock and calculating the standard deviation over a given time period.
This standard deviation is then expressed as an annualized percentage.
Historical volatility is often referred to as actual volatility or realized volatility.
Short-term or more active traders tend to use shorter time periods for measuring historical volatility, the most common being five-day, 10-day, 20-day, and 30-day.
Intermediate-term and long-term investors tend to use longer time periods, most commonly 60-day, 90-day, 180-day, and 360-day.