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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:

  1. 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.

  2. 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?

Thanksss!!

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  • $\begingroup$ I have never heard the term "daily returns scaled to weekly" (at least in English). But since there are 5 days in a week it could mean the daily returns multiplied by 5. To "scale up or down" generally means to multiply or divide the data by a consant. $\endgroup$ – noob2 Mar 25 at 1:55
  • $\begingroup$ Thank you for you reply. $\endgroup$ – gabriele Mar 25 at 13:44
  • $\begingroup$ Howeve,r what's the difference? and from a logic standpoint does it make any sense compared to calculate weekly returns ? I mean that I have tried to multiple the daily returns by 5 and the expected value is the same of that of weekly returns but the volatiliy is different. Which is the more suitable in your opinion? $\endgroup$ – gabriele Mar 25 at 13:51

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