Realized Volatility Calculation

Realized volatility calculation is the process of measuring the actual historical price fluctuations of an asset over a given timeframe. It is calculated using the standard deviation of daily logarithmic returns, providing a factual basis for how volatile an asset has been.

This is distinct from implied volatility, which is a forward-looking expectation. By calculating realized volatility, traders can see if their assumptions about asset behavior have been accurate.

It is an essential step in validating volatility-based trading models and in understanding the actual risk profile of a crypto asset. This numerical data is critical for back-testing and performance review.