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I am working right now at something and I want to get sure that I am not doing any mistakes - maybe you can help me:

I collected weekly returns from a stock over 179 weeks and know I want to calculate the YEARLY volatility. The Standard Deviation of the 179 weeks is 1,56%. In order to calculate the yearly volatility I calculated 1,56%*SQRRT(52), because a year got 52 weeks. is that correct? or what should i calculate?

I'd be very grateful if someone could help me! :)

Kind regards, Memecon

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  • $\begingroup$ Yes, that is the accepted way to do it. $\endgroup$ – noob2 Mar 1 at 16:13
  • $\begingroup$ okay so no mathematic mistake if i put the weeks of one year in the square root if i calculate it from observations for more than three years (179 weeks)? $\endgroup$ – memecon Mar 1 at 16:15
  • $\begingroup$ Right. The standard deviation calculation takes 179 weekly observations as input, internally the algorithm uses (179-1) in the denominator and returns the standard deviation per week. This number then needs to be multiplied by $\sqrt{52}$ to turn it into a per year number (52 weeks per year). $\endgroup$ – noob2 Mar 1 at 16:22
  • $\begingroup$ thank you so much! $\endgroup$ – memecon Mar 1 at 16:29

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