Thursday, January 13, 2011

VIX for individual stocks

Another one from my colleague Craig Newmark's excellent blog, Newmark's Door.  This time it's on the plans of the CBOE to create stock specific volatility measures.  Basically a VIX for individual stocks.

Sounds cool although it seems a little like a tool in search of an application.   While overall market volatility is quite important because we can't diversify away market risk, individual stock volatility is less important in the context of a diversified portfolio.