A stock’s average rate of return is 20%, while its maximum rate is 10%
This figure is not only important for understanding, but it also highlights the limitations of volatility. Volatility does not necessarily reflect return and risk trade-offs. If future expectations are not accurate, for example, volatility might be high but returns may be low on a stock. Investors may seek higher returns, but they should also take into account liquidity needs and diversification requirements that could impact the overall investment process. Ultimately then, while knowing one’s mean log price relative can provide useful insights into potential returns on investments under normal conditions these figures should always be evaluated together with additional criteria in order determine an optimal portfolio allocation strategy that takes into account all relevant considerations before committing funds.