Let us briefly specify some details. The word volatility means rapid or unexpected changes.
At present there exist several notions of volatility.
Actual volatility (AV)
A measure of randomness or uncertainty or irregularity in the behavior of price at present time. Usu-ally AV is approximated by historical
volatility, but this is correct only for the stationary time series. So in practice AV is unobservable.
