Volatility models are statistical tools used to measure and predict the fluctuations in the price of financial assets, such as stocks or commodities. These models help investors understand the level of risk associated with an asset by analyzing past price movements and estimating future volatility. Common types of volatility models include GARCH (Generalized Autoregressive Conditional Heteroskedasticity) and ARCH (Autoregressive Conditional Heteroskedasticity). By providing insights into market behavior, volatility models assist traders and analysts in making informed decisions. They are essential for risk management, portfolio optimization, and pricing derivatives, as they help quantify uncertainty in financial markets.