Is equity market volatility due for a comeback?

Barring geopolitical disruptions, there is little evidence that volatility will make an extended return

By John Q. Frank, CFA, QQQ Equity Product Strategist

Equity market volatility has been remarkably low in recent years, which has corresponded to strong large-company equity performance — particularly for the Nasdaq-100 Index and the S&P 500 Index. This has led some market observers to wonder whether we’re due for a correction of sorts in volatility, much as stocks might correct after a bull market. Barring major geopolitical disruptions, I don’t see evidence that this will be the case.

The CBOE NASDAQ Volatility Index (the VXN) is the Nasdaq-100’s version of the CBOE Volatility Index (the VIX), which measures the volatility of the S&P 500 Index and is perhaps the most commonly cited barometer of near-term equity market volatility. The VXN reflects...

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