Your school professor didn't tell you everything you need to know about calculating volatility. List the sequence of prices for a financial instrument 3. Calculate the standard deviation of the percentage price changes 5. Based on these data, you would say that electricity volatility is high.
Prices seem to bounce up readily, only to bounce back the next week.
The percentage change has a constant mean and volatility. The percentage change is independent of previous changes. That is, the price follows a random walk. These assumptions are approximately true when dealing with stocks, although certainly there are many exceptions. They are less reliable for bonds, where volatility declines as a bond approaches maturity.