# EWMA

*Risk & Portfolio — Finicade finance glossary*

Exponentially weighted moving average — a volatility estimate that weights recent returns more heavily than old ones, so it reacts quickly when markets turn. A staple of practical risk models.

**Also known as:** exponentially weighted moving average, decay-factor

**Related terms:** [Historical Volatility](https://finicade.com/glossary/historical-vol), [GARCH](https://finicade.com/glossary/garch), [Volatility Clustering](https://finicade.com/glossary/volatility-clustering)

**Taught in:** Risk Arena — Inside RiskMetrics: λ = 0.94

Source: https://finicade.com/glossary/ewma