ASYMMETRIC VOLATILITY PHENOMENON

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The asymmetric volatility phenomenon is the observed tendency of equity market volatility to be higher in declining markets than in rising markets.
Better still, asymmetric volatility is a situation in which the volatility of a security is higher when the market index is performing poorly than when it is performing well.

 Asymmetric volatility is a real phenomenon where market uptrends tend to be more gradual and downtrends tend to be sharper and steeper thereby becomes a cascading declines; the daily range in prices tends to be higher during downtrends than uptrends. There has been no consensus reached on the causes of asymmetric volatility, but factors such as leverage and panic(such as the recent equities market structure by NSE or The Exchange) are often attributed to it.

 Investdata Academy

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