🏄Volatility

Fine wine displays relative stability alongside its rate of return.

Fine wine's return profile is accompanied by lower volatility than many mainstream and alternative assets.

The graph below compares annualised volatility vs. annualised return between wine and several other asset classes.

As well as the market's favourable supply-demand dynamic, wine's volatility profile stems from a lower liquidity. Whilst this can be a drawback, it does mean that the asset class is protected from panic selling in the event of a broader economic downturn.

As a result, wine exhibits favourable risk-adjusted returns compared to other asset classes. This is demonstrated by a higher Sharpe Ratio (shown below), which is a measure of the average return of an asset in excess of the risk-free rate and relative to its volatility.