Help a Noob Do Some Analysis on Historical Returns.

[and 10]

Ok, so I've never done any modeling or really any hard core analysis before. Please tell me what steps I should take and what I should not do.

Goal: Find x% chance that a return of y will occur based on historical returns.

 

Time: 380 days including non-trading days.

 

Steps:

1) Get daily closing prices for the asset.

2) Find 380 day returns. For example, if today is day t, take price t/(price t-380)-1. Do this for all days except for the first 380 days of the asset's inception.

3) What should I do next? Plot a frequency distribution by rounding the returns to 2 decimals?

 

Any other ways to do this? What should I do?

[MightyMouse 12]

Ok, so I've never done any modeling or really any hard core analysis before. Please tell me what steps I should take and what I should not do.

Goal: Find x% chance that a return of y will occur based on historical returns.

 

Time: 380 days including non-trading days.

 

Steps:

1) Get daily closing prices for the asset.

2) Find 380 day returns. For example, if today is day t, take price t/(price t-380)-1. Do this for all days except for the first 380 days of the asset's inception.

3) What should I do next? Plot a frequency distribution by rounding the returns to 2 decimals?

 

Any other ways to do this? What should I do?

 

It seems like you have 5 minutes to figure this all out.

[and 10]

It seems like you have 5 minutes to figure this all out.

What do you mean by 5 minutes to figure it out?

[ratmpower 10]

I am not sure if that is as simple as you put it. The problem you mention is exactly what every investor in the world is trying to solve and each have their own solution. The crux of the problem is how to use historical information to make probabilistic prediction about the future. And this is not straigtforward. People use chart patterns, trend analysis and all sorts of things to attack this but there is no proven strategy that always works since the market displays very close to random behavior.

 

- Strategyard.com

Develop and test your investing strategies for free.