The volatility comparison matrix
Nine quantities, all commonly called volatility, that are not the same thing. This is the fastest way to work out which one a sentence is actually talking about.
Quick answer: The volatility comparison matrix separates the nine distinct quantities that all get called volatility, showing for each what it is computed from, whether it looks backward or forward, what it actually says, its units, and what dominates it — because most disagreements between two correct volatility numbers come from comparing two different quantities.
Nine quantities, all commonly called "volatility", that are not the same thing. This table is the fastest way to work out which one a sentence — or a screener, or a broker's platform — is actually talking about.
| Measure | Computed from | Looks | What it really says | Units | Dominated by | Kind |
|---|---|---|---|---|---|---|
| Historical volatility | Past prices | Backward | Realised, close-to-close | Annualised % | A window you chose | Measured |
| Realised volatility | Past prices (often intraday) | Backward | What actually happened | Annualised % | The estimator you chose | Measured |
| Implied volatility | Option prices | Forward | What the market charges | Annualised % | The model you inverted | Inferred |
| Expected volatility | A forecast or a model | Forward | What someone predicts | Annualised % | Whoever made the forecast | Forecast |
| Forward volatility | Two implied volatilities | Forward, between two future dates | The window between them | Annualised % | The term structure | Derived |
| India VIX | The whole NIFTY chain | Forward, fixed 30-day | Model-free expected variation | Annualised % | NSE's published method | Inferred |
| Variance | Any of the above, squared | Either | The additive quantity | %² (or fraction²) | The volatility it squares | Derived |
| IV Rank | One year of IV | Neither — it is context | Position in the 52-week range | 0–100 | Two extreme days | Context |
| IV Percentile | One year of IV | Neither — it is context | Share of days below today | 0–100 | Every day equally | Context |
How to read this table
The Looks column is the one that causes the most damage. Historical and realised volatility are statements about a past that cannot change. Implied volatility is a statement about a future that has not happened, and it is a price, not a prediction — the number at which supply met demand. Comparing the two, as the HV vs IV page does, is comparing a photograph with a weather forecast. Both are useful; neither is the other.
The Dominated by column explains most disagreements between two correct numbers. Two people compute historical volatility on the same day and get different answers because they chose 10-day and 30-day windows. Two people look up "IV rank" and get 18 and 62 because one is reading rank and the other percentile. Neither is wrong; they are answering different questions.
The forward-looking measure and the backward-looking one, side by side
Both series describe the same underlying over the same period.
Which one should I use?
- To decide whether an option is expensive: compare implied volatility with realised volatility over a comparable window, and check IV Rank and IV Percentile together.
- To size a position or set a strike: use implied volatility, because that is what the market is charging for the period you will actually be exposed to. See Expected Move.
- To model a portfolio's risk: use variance, not volatility, because variance is what adds across independent positions and across time.
- To describe what has already happened: use realised volatility, and say which estimator and which window.
- Never compare a 10-day historical volatility with a 30-day implied volatility and conclude anything from the gap. You have compared two different periods and attributed the difference to the option market.
Frequently asked questions
How many different things are called volatility?
At least nine in common use: historical, realised, implied, expected and forward volatility, a volatility index such as India VIX, variance, and the two context metrics IV Rank and IV Percentile. They are computed from different data and answer different questions.
What is the difference between historical and realised volatility?
In practice they overlap. Historical volatility conventionally means close-to-close over a chosen window; realised volatility usually means a finer estimator, sometimes using intraday data. Both look backward at prices that already happened.
Is implied volatility a forecast?
No. It is a price — the number at which supply met demand for optionality. It is a biased forecast of subsequent realised volatility, usually exceeding it, and that bias is the volatility risk premium.
Why do two people compute different historical volatilities for the same stock?
Because they chose different windows. A 10-day and a 30-day historical volatility of the same series are different numbers and both are correct. The window is the question, not a detail.
When should I use variance instead of volatility?
When quantities must add. Variance adds across independent periods and across independent positions; volatility does not. That is why forward volatility, the square-root-of-time rule and variance swaps all exist.
Which volatility should I use to size a position?
Implied volatility, because it is what the market is charging for the period you will actually be exposed to. Use realised volatility to describe what has already happened, and variance to model a portfolio.
Published 9 July 2026. Educational content only — not investment advice.