thanks for looking into this question. See the picture below (better is right-mousebutton - open in new tab). I also have the price and return data of the Stocks if that's needed to calculate the total 2-year period volatility.
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It's an additive process so you will get the variance of year one and multiple by number of trading days divided by 256, do the same for year 2 , sum the results and the take it to the power of (512/total number of trading days)
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$\begingroup$ There is a different but let's keep it simple $\endgroup$ – Tulio Carnelossi Jan 15 '15 at 1:34
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$\begingroup$ Thanks a lot Tulio! If I could I would definitely vote this answer up. I'm wondering however, why you divide number of annual trading days by 256, and then use the value of 512 in the power? I now do achieve the right answer but don't know how to change the formula.. I also for example like to know the portfolio volatility for the period ranging from Mar2012-Feb 2014, if I have volatility from Mar-Dec 2012, whole 2013, and Jan-Feb 2014. Can you elaborate the formula a little bit more? Thanks a lot you've been a great help already! $\endgroup$ – AltTabsen Jan 15 '15 at 8:25
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$\begingroup$ 256 in some measure is the business business days in a year. The reason you take to the power of that expression is to have volatility measured in years $\endgroup$ – Tulio Carnelossi Jan 15 '15 at 11:27
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$\begingroup$ Thanks Tulio! I know see that I can apply this to certain subperiods within years as well.. You've saved me for a finance paper I have to write (3rd year economics) - I could only find wrong methods through googling $\endgroup$ – AltTabsen Jan 15 '15 at 14:42
