Also, please leave a comment below if you noticed any errors or have any suggestions/questions.
In the next post, we will show how to obtain descriptive statistics for stock returns using Excel.įeel free to share this post if you enjoyed reading it. The previous post explained how to plot stock prices and returns.
This post is part of the series on analyzing stock returns. Stata: Use the histogram command (the option ‘bin’ specifies the number of bins, ‘width’ sets the width of bins, and ‘start’ indicates the starting pointing of first bin).
Of course, you can plot a histogram of stock returns using statistical software other than Excel as well. This means that Microsoft shares had higher return volatility than Kellogg shares during the sample period.Ĭreating a histogram of stock returns | Analyzing stock returns #3Ĭreating histograms with other statistical software In particular, there are more observations both below -5% and above 10% for the Microsoft stock compared to the Kellogg stock. However, there are differences between the return distributions of these two stocks as well: The distribution of Kellogg returns is more tightly centered around the mean compared to Microsoft returns, which are more spread out. We observe that for both stocks most monthly return observations fall within the -5% to 10% range. Interpreting histograms of stock returnsīelow you can see the histograms of monthly returns for Microsoft (Figure 1) and Kellogg (Figure 2) for the period between Januand January 1, 2020. It’s often a good idea to check the “Chart Output” option (again you don’t have to) so that Excel automatically produces the histogram chart. For example, if you generated a bin from -10% to -5%, the histogram would give you the number of return observations that fall within that range in the sample. You can (but don’t have to) specify your own bins (the “Bin Range”) for the histogram.
You’ll then have to specify the “Input Range”, which are the cells in which the stock returns are stored. Once you click on the Data Analysis box, choose the “Histogram” tool. Otherwise, the Data Analysis box would not appear under the Data tab.
Note that if you haven’t used Data Analysis before, you need to make sure that the “Analysis ToolPak”, which is an Excel add-in, is enabled. To plot a histogram in Excel, you need to go to the “Data” tab and then click on the “Data Analysis” box. We will be working with monthly returns of two US stocks: Microsoft (MSFT) and Kellogg (K). Using Excel’s “data analysis” tool to plot a histogram Moreover, we will explain how to interpret a histogram of stock returns. In this tutorial, we will show how to create a histogram using Excel. An easy way to visualize the distribution of stock returns is to plot a histogram.