I have a doubt about the average daily return for a 2 stock porfolio. I have the data of both stock returns over a 1511 day period. I used 2 approachs to calculate the average return. In the first one, I calculated the average of the returns of each individual stock over the 1511 days period, then I used the formula
$Average Return = (Weight 1*Return 1)+(Weight2*Return2)$
I'm getting 0.058%
In the second approach, I assumed a starting capital ammount, choose the same weights, and calculated the daily increase on the starting capital over the 1511 period. I calculated the returns for every day and got the average of those. The solution was 0.056%.
Is the second approach incorrect? Why are those differences found?