Interpolation is a powerful tool for investors that enables them to pinpoint unknown values in conjunction with known data points. By understanding the pattern of the data, investors can use the trend across a set of data points to estimate unknown values and plot the estimated points on a chart. However, it is important to note that interpolation is not always an accurate representation of the volatility of publicly traded stocks.

Interpolation utilizes simple mathematics by relying on degree polynomials and linear functions. This technique is commonly used in financial forecasting and risk analysis. By plotting data points and connecting the dots across the dots, investors can create a chart that will show the historic price movement and approximate trends of the security. This chart can be used to project future price trends of the security.

Although, interpolation can be used in various form of financial analysis, it is important to note that there are some limitations associated with using interpolation when investing. For example, interpolation does not take into consideration the full range of data points available for a security and therefore can lead to an underestimation of the volatility of a stock. Furthermore, interpolation is not as precise as some types of financial analysis, and therefore is not always the best choice for investors.

Despite its limitations, interpolation can still be beneficial in certain scenarios. For example, it can be useful for investors who are looking for opportunities to purchase particular assets at a specific price point. Interpolation can provide direct calculations which enable investors to identify prospective opportunities for making a potential return on their investment. That being said, it is important to note that interpolation needs to be used in conjunction with other types of financial analysis to ensure that the most accurate assessment of market conditions is made.

Interpolation is a valuable tool for investors and can be used to greatly enhance investment decisions. However, due to its lack of precision and inaccurate representation of market conditions, it is important to use interpolation in conjunction with other types of financial analysis before making an investment decision.