Two funds can both run from $100.00 to $104.00 over five periods, a 4.0 percent gain, while one of them falls 19.6 percent in a single period on the way and touches $88.00. The end-to-end percentage is the same number for both. The condition that decides which figure matters is when the money is needed: a sale at $88.00 books a 12 percent loss from $100.00, and the later $104.00 observation does not reach back to change it.
Example: two paths from $100.00 to $104.00
Example with illustrative price paths, since no published series lands on round numbers. Period changes are (new − old) ÷ old, rounded to one decimal. No distributions, costs or taxes are included, so these are price changes only.
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| Period | Path A price | Path A change | Path B price | Path B change |
|---|---|---|---|---|
| Start | $100.00 | — | $100.00 | — |
| 1 | $101.00 | +1.0% | $112.00 | +12.0% |
| 2 | $102.00 | +1.0% | $90.00 | −19.6% |
| 3 | $103.00 | +1.0% | $105.00 | +16.7% |
| 4 | $103.50 | +0.5% | $88.00 | −16.2% |
| End | $104.00 | +0.5% | $104.00 | +18.2% |
Check the two largest moves on Path B. From $112.00 to $90.00 is −$22.00 ÷ $112.00 = −19.64 percent, shown as −19.6. From $88.00 to $104.00 is $16.00 ÷ $88.00 = +18.18 percent, shown as +18.2. Both paths start at $100.00 and end at $104.00, so both report +4.0 percent end to end, and Path A's largest single-period move is +1.0 percent against Path B's −19.6 percent. The 12 percent drawdown to $88.00 needs a 13.64 percent rise to get back to $100.00, the arithmetic worked through in why a 20 percent loss needs a 25 percent recovery.
Circuit breakers are written against the path
Market rules are built around single-session moves, not endpoints. The SEC's investor bulletin on market-wide circuit breakers sets three levels against the S&P 500, in force since 4 February 2013: a 7 percent decline halts trading for 15 minutes, a 13 percent decline halts it for 15 minutes again, both applying before 3:25 p.m., and a 20 percent decline halts trading for the remainder of the day. The earlier levels, until 4 February 2013, were 10, 20 and 30 percent against the Dow Jones Industrial Average.
Individual stocks have their own brakes. The same bulletin describes limit up-limit down price bands set at 5, 10 or 20 percent above and below the average price of the stock over the immediately preceding five-minute trading period, with the bands doubling during the opening and closing periods of the trading day, phased in from 8 April 2013 for S&P 500 and Russell 1000 stocks and from 8 October 2013 for the remaining national market system securities. A −19.6 percent period move like Path B's would have run through every one of those thresholds; a +4.0 percent five-period result would have tripped none of them. The label attached to the endpoint is a separate reading, set out in bull and bear markets.
Beta measures direction against an index, not swing size
FINRA's volatility page describes volatility as the dramatic swings in market indexes and stock prices, and gives beta as the measure of how a stock moves relative to the market: the benchmark index has a beta of 1, a stock with a beta of 1.2 has historically moved 120 percent for every 100 percent move in an index such as the S&P 500, and a beta of 0.85 moved less than the underlying index.
Beta and swing size answer different questions. A stock whose moves are large but unconnected to the index carries a high swing magnitude and a low beta at the same time, because beta scales a relationship while the swings measure the stock alone. The same page puts both under the heading of risk, which is why a published figure needs its metric, its observation interval and its date range named before it is compared with another. A fund's own published figures come with those labels, as an index is a measurement; an ETF is a product sets out.
Source references
Primary sources used for this guide. Follow the links for the original scope, definitions and conditions.
- Investor Bulletin: New Measures to Address Market Volatility | SEC.govAccessed 2026-09-17
- Volatility | FINRA.orgAccessed 2026-09-17