StockVolatilityThreeYears Function: Measure Volatility Over 3 Years

The StockVolatilityThreeYears function is designed to calculate the standard deviation of daily returns for a stock (or ETF, index, etc.) across the previous three calendar years (approximately 1095 trading days). By retrieving daily adjusted closing prices from MarketXLS’s database, this function helps investors quickly assess the risk and volatility associated with a specific ticker symbol. Having a clear view of volatility can inform portfolio decisions, risk management strategies, and comparative analyses.

Why Use This Function?

• Gain Insight into Long-Term Risk: Over a three-year horizon, volatility paints a more stable picture of a stock’s behavior than shorter windows.
• Compare Multiple Stocks: Assess and compare the risk profiles of different tickers over the same historical period.
• Inform Strategic Decisions: Use this integral risk measure to guide rebalancing, hedging, or other portfolio management tactics.
• Automate in Excel: Leverage the power of MarketXLS to bring real-time and historical data directly into your spreadsheet for ongoing analysis.

How to Use in Excel

=StockVolatilityThreeYears("Symbol")

1. In any cell within your Excel workbook, type the function name followed by an opening parenthesis.
2. Enter the ticker symbol of the stock you wish to evaluate within quotes.
3. Close the parenthesis and press Enter.
4. The function returns the standard deviation of daily returns over roughly 1095 days (3 years), typically as a decimal value.
   • Note: If you prefer a percentage format, apply a custom Excel format (e.g., “0.00%”) to the cell.

Parameters Explained

• The function automatically calculates daily returns based on adjusted closing prices and then computes standard deviation from these returns over the specified 1095 days.
• License validation occurs before data retrieval. If the license is invalid, the function returns an error message.

Example Usage

Basic Examples

1. Direct Symbol in a Cell
   • In cell A1:
   =StockVolatilityThreeYears("AAPL")
   • Result: Standard deviation of Apple’s daily returns for the last ~1095 days (in decimal form).

2. Symbol Referenced from Another Cell
   • Suppose cell B1 contains: MSFT
   • In cell A1:
   =StockVolatilityThreeYears(B1)
   • Result: Volatility measure for Microsoft’s stock over the same period.

3. Combining with Math or Formatting
   • =StockVolatilityThreeYears("GOOG")*100
   • Formats the return in percentage terms (e.g., if the function returns 0.02, the cell shows 2%).

Advanced Scenarios

1. Conditional Analysis of High Volatility
   • =IF(StockVolatilityThreeYears("TSLA")>0.03, "High Volatility", "Normal Range")
   • This example checks if Tesla’s three-year volatility is above 3% daily returns, categorizing it as “High Volatility” or “Normal Range.”

2. Using Cell References and Averages
   • =AVERAGE(StockVolatilityThreeYears(A2), StockVolatilityThreeYears(A3), StockVolatilityThreeYears(A4))
   • If cells A2, A3, and A4 each contain different tickers, this formula calculates the average 3-year volatility across the selected stocks, offering a snapshot of portfolio risk.

3. Integrating with a Trading Strategy
   • A more complex scenario might involve combining volatility results with other MarketXLS functions, such as trailing returns or fundamental measures, to create a custom risk-adjusted performance metric.

Common Questions and Troubleshooting

1. “Why do I get NA as a result?”

   • Possible reasons include:
     • Invalid or unrecognized ticker symbol.
     • License expired or invalid.
     • Data temporarily unavailable.

2. “My result is ‘Error: Insufficient data points…’”

   • There may not be enough historical data for the selected symbol over 1095 days. New or thinly traded stocks can have gaps in data.

3. “Is the returned volatility in decimal or percentage format?”

   • By default, the function returns decimal. For example, 0.02 means 2%. Apply Excel formatting or multiply by 100 for a percentage.

4. “Does this function work for international tickers?”

   • The function primarily caters to US markets. Some international exchanges might be partially supported if recognized in the MarketXLS database, but invalid or unsupported symbols return “NA.”

5. “Can I handle large data sets or daily recalculation?”

   • Yes. For large spreadsheets, ensure efficient formulas and references. MarketXLS caching and updating preferences can affect performance.

Using the StockVolatilityThreeYears function effectively helps you monitor long-term price fluctuations and manage portfolio risk with confidence. Whether you’re a long-term investor comparing large-cap stocks or a trader looking for strategic edges, this function streamlines historical volatility analysis right in Excel.