I am new in this blog and first of all I want to apologise for my english. I have to calculate, for a university project, the weekly returns and daily scaled returns to weekly for few stocks
For weekly returns, no problem i calculated them by: ln(Pt+1/Pt).
I have difficulties to understand what daily returns scaled to weekly mean.
My possbile solutions are:
to calculate daily return with daily data ln(Pt+1/Pt) and then adding them up in order to obtain weekly returns, but this way is the same thing of calculating weekly return as shown above.
other solution is to calculate weekly return for every day, I mean to calculate weekly overlap return.
In my opinion the first solution is the most logic and i think that this is a trick question.
But the full question in the assignment is: "the histogram plot of the weekly returns and the daily returns scaled to weekly. Which is the difference? What do you think is more suitable to estimate the weekly return?"
Thus, by this answer I imply that there'll be a difference and hence my first solution is wrong.
Could you help me?