What is 'alpha decay' in finance, and are past returns indicative of future returns after all? originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from ...

In this article I will walk you through the commonly used but wrong way to think about volatility decay. We'll then walk through an example of volatility decay with realistic numbers. Afterwards, ...

What these two processes share is baked into the math of each. In fact, in that respect, they're nearly identical. They both involve some stuff (atoms or money) that is either growing or shrinking.