Where σ(Daily) is the standard deviation of the daily returns for a strategy. T is the time period over which we want to calculate volatility. For an annualised calculation, T is set to 252, as this represents the number of trading days in a calendar year.
Low Vol Investing
Low volatility is a recognised style of factor investing. It aims to buy low volatile stocks with the goal of achieving a higher risk adjusted return than the market. For factor based models, investors prefer to reduce volatility for multiple reasons. A volatile portfolio can have an emotional toll on the investor as well as introducing a higher risk of losses if the investor needs to exit a position at a future date. According to financial theory risk and return are positively related, however in practice there are anomalies.