Mistake in the explanation
As we know standard deviation is the square root of the variance, why did you do that (sec_returns['BEI.DE'].std() * 250 **0.5) ? If we did sec_returns['BEI.DE'].var() * 250 **0.5 it would be correct, otherwise I don't think you explained it correctly in the video
2 answers ( 0 marked as helpful)
Hi Nurlan!
Thanks for reaching out.
.std() leads us to a value that equals the square root of the value obtained by .var().
Then, sticking to Python syntax, 250 ** 0.5 equals the square root of 250. It doesn't take the square root of the value as obtained by .std() (as it would have meant if we followed "the rules" of mathematics.
Hope this helps.
Best,
Martin
I understood, thank you for explanation