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elfinorr
elfinorr
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Should I work with How to convert daily returns or withto annual returns?

Removed irrelevant tag; changed a couple commas to decimal points
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Herr K.
Herr K.
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I have a task: to download daily stock quotations, create a portfolio and draw a CML-line. Risk-free rate was given: 6.5% of annual. I decided to convert daily returns to annual returns, using formula from here: $$AnnualReturn = [(DailyReturn + 1)^{365} - 1]*100\%$$ I found out, that result numbers are just insane. For example, for one company price 2017/09/07 was 27,.025 , price 2017/09/08 was 27,.77. Then $$ DailyReturn = \frac{27.77-27.025}{27.025} = 0,0276$$$$ DailyReturn = \frac{27.77-27.025}{27.025} = 0.0276$$ $$AnnualReturn = [(1,0276)^{365} - 1]*100\%=2069063\%$$$$AnnualReturn = [(1.0276)^{365} - 1]*100\%=2069063\%$$ I suppose I did something wrong. Could you help me, please? And there is one more question: can I convert a daily return to annual return like this? $$AnnualReturn = DailyReturn*365$$ Thank you in advance

I have a task: to download daily stock quotations, create a portfolio and draw a CML-line. Risk-free rate was given: 6.5% of annual. I decided to convert daily returns to annual returns, using formula from here: $$AnnualReturn = [(DailyReturn + 1)^{365} - 1]*100\%$$ I found out, that result numbers are just insane. For example, for one company price 2017/09/07 was 27,025 , price 2017/09/08 was 27,77. Then $$ DailyReturn = \frac{27.77-27.025}{27.025} = 0,0276$$ $$AnnualReturn = [(1,0276)^{365} - 1]*100\%=2069063\%$$ I suppose I did something wrong. Could you help me, please? And there is one more question: can I convert a daily return to annual return like this? $$AnnualReturn = DailyReturn*365$$ Thank you in advance

I have a task: to download daily stock quotations, create a portfolio and draw a CML-line. Risk-free rate was given: 6.5% of annual. I decided to convert daily returns to annual returns, using formula from here: $$AnnualReturn = [(DailyReturn + 1)^{365} - 1]*100\%$$ I found out, that result numbers are just insane. For example, for one company price 2017/09/07 was 27.025 , price 2017/09/08 was 27.77. Then $$ DailyReturn = \frac{27.77-27.025}{27.025} = 0.0276$$ $$AnnualReturn = [(1.0276)^{365} - 1]*100\%=2069063\%$$ I suppose I did something wrong. Could you help me, please? And there is one more question: can I convert a daily return to annual return like this? $$AnnualReturn = DailyReturn*365$$

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elfinorr
elfinorr
  • 61
  • 1
  • 1
  • 4

Should I work with daily returns or with annual returns?

I have a task: to download daily stock quotations, create a portfolio and draw a CML-line. Risk-free rate was given: 6.5% of annual. I decided to convert daily returns to annual returns, using formula from here: $$AnnualReturn = [(DailyReturn + 1)^{365} - 1]*100\%$$ I found out, that result numbers are just insane. For example, for one company price 2017/09/07 was 27,025 , price 2017/09/08 was 27,77. Then $$ DailyReturn = \frac{27.77-27.025}{27.025} = 0,0276$$ $$AnnualReturn = [(1,0276)^{365} - 1]*100\%=2069063\%$$ I suppose I did something wrong. Could you help me, please? And there is one more question: can I convert a daily return to annual return like this? $$AnnualReturn = DailyReturn*365$$ Thank you in advance