Using a Histogram to Inspect Empirical Log Returns

Summary

The document asks how to examine the empirical distribution of log returns calculated from an asset price series, and whether this can be done in spreadsheet or programming tools. The responses give a basic workflow: calculate successive log returns from the price observations, then plot their values in a histogram. One answer points to spreadsheet histogram features, noting that the available route depends on the Excel version or installed analysis tools.

This is a practical first step for visualizing the shape and spread of observed returns. The material does not explain how to calculate log returns, choose histogram bins, compare the histogram with a theoretical distribution, or interpret skewness, tail behavior, and dependence over time. It also offers no comparison with Python or other statistical software, and gives no analysis of the dataset itself. A histogram summarizes the sample but does not establish that returns follow a particular distribution or capture their chronological structure.

Key ideas

• Compute successive log returns from the asset price observations before plotting their distribution.
• A histogram provides a basic visual summary of empirical return values.
• Spreadsheet histogram features may depend on the software version or enabled analysis tools.
• The document gives no guidance on bin selection or statistical interpretation.
• A histogram alone does not assess time dependence or prove a theoretical distribution fits.

Tags

# Empirical Probability Distribution


# Empirical Probability Distribution












I have a dataset with 3.000 observation (price of an asset). I want to study the empirical distribution of the logRet of that time series. How can I do it in Excel? if not possible to do it in Excel, Python? Wolfram?

thanks, Ciao

## Answer by simzoor (score 0, accepted)

https://quant.stackexchange.com/a/54366

- calculate n-1 log returns

- draw a histogram via data -> analytics

## Answer by Martin Vesely (score 0)

https://quant.stackexchange.com/a/54376

You can use histogram in Excel. Either on Insert tab, where you choose Add graph and then histogram (in Excel 2016 and higher), or go to tab Data and Analytics tools (add-ins is needed for that) and choose item Histogram.

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