# Volatility Ratio

`D07-F06-A05` · Technical Indicators → Range and Volatility Indicators · archetype `series-transform` · difficulty 2/5 · verification **verified**

Full page: https://docs.thefintechbuilder.com/technical-indicators/range-and-volatility-indicators/volatility-ratio/
Agent skill: `npx skills add IslamBaraka90/Fintech-Algorithms-Library` — https://docs.thefintechbuilder.com/guides/agent-skill/

## Install and import

```bash
npm install fintech-algorithms
```

```ts
import { volatilityRatio } from "fintech-algorithms/technical-indicators/range-and-volatility-indicators/volatility-ratio";
```

## Signature

```ts
volatilityRatio(input)
```

Volatility Ratio: the standard deviation of close-to-close simple returns over a short window divided by the same measure over a long window.

## Parameters

| Name | Type | Required | Notes |
| --- | --- | --- | --- |
| `input` | `TopicInput` | yes | `bars` is the required OHLCV array -- each bar carries `timestamp`, `open`, `high`, `low`, `close`, `volume` and an optional `basis`, strictly ordered by timestamp. From `parameters` this topic reads `short_period` (default 5, integer >= 2) and `long_period` (default 20, integer, and strictly greater than `short_period`). The family also validates `period` (default 14, integer >= 2) before this branch runs, even though the ratio does not use it. |

## Returns

`TopicResult`

`series` holds a single key, `value`, the short-over-long deviation ratio; `latest.value` is its last reading. The warm-up is `long_period` leading nulls, so `ready_at` is 20 at the defaults.

## Warm-up

The first ``long_period` bars (20 at the defaults)` positions are `null`. Returns are undefined on the first bar, so the long-window deviation only completes at index `long_period` rather than `long_period - 1`. `value` is also null on any bar where the long-window deviation is zero.

## Errors

- When `parameters.short_period` is not an integer >= 2 — throws Error
- When `parameters.long_period` is not an integer greater than `short_period` — throws Error
- When `parameters.period` is not an integer >= 2 — throws Error

## Complexity

Time `O(n * long_period)`, space `O(n)`.

## Worked example

Captured by running this function on the input its own test provides. Real output of real code — but not asserted against a published figure.

### Input

`input`:

```json
{
  "bars": [
    {
      "timestamp": "2024-01-02",
      "basis": "synthetic-unadjusted",
      "open": 100,
      "high": 101.45,
      "low": 98.695,
      "close": 100,
      "volume": 750000,
      "benchmark": 200
    },
    {
      "timestamp": "2024-01-03",
      "basis": "synthetic-unadjusted",
      "open": 101.49111452,
      "high": 103.38381693,
      "low": 100.05480022,
      "close": 101.78791214,
      "volume": 795117,
      "benchmark": 200.56326135
    },
    {
      "timestamp": "2024-01-04",
      "basis": "synthetic-unadjusted",
      "open": 102.45519048,
      "high": 104.6701838,
      "low": 100.91147007,
      "close": 102.9549389,
      "volume": 840234,
      "benchmark": 201.11020913
    }
  ],
  "parameters": {}
}
```

### Call

```ts
volatilityRatio(input)
```

### Returns

object with 9 fields: topic_id, title, state, ready, ready_at, series, latest, parameters, …

```json
{
  "topic_id": "D07-F06-A05",
  "title": "Volatility Ratio",
  "state": "calculated",
  "ready": true,
  "ready_at": 20,
  "series": {
    "value": [null, null, null, null, null, null]
  },
  "latest": {
    "value": 0.593478196387429
  },
  "parameters": {},
  "diagnostics": {
    "causal": true,
    "input_count": 96
  }
}
```

## Verification and provenance

Tier: **verified** (via E).

The worked example below is the figure published in this algorithm's article, replayed and asserted by the test suite on every build. The arithmetic cannot drift without the build failing.

Both tiers guarantee the signature. Full explanation: https://docs.thefintechbuilder.com/guides/verification/

Generated from the docs.json payload shipped inside fintech-algorithms@0.13.0.
The signature and parameter list are checked against the compiled implementation at build time,
so a description that contradicts the code fails the build rather than reaching this file.

## Links

- Article (how it works, step by step): https://thefintechbuilder.com/technical-indicators/range-and-volatility-indicators/volatility-ratio/
- Implementation source: https://github.com/IslamBaraka90/Fintech-Algorithms-Library/blob/main/src/technical-indicators/range-and-volatility-indicators/volatility-ratio/impl.ts
- Package on npm: https://www.npmjs.com/package/fintech-algorithms
- Domain index for agents: https://docs.thefintechbuilder.com/technical-indicators/llms.txt