Statistical Summary of Daily Market Returns (2000–2008)

Interpretation of Results

1. Wide Dispersion of Returns (High Volatility)
   The standard deviation of 78.38% highlights substantial daily price variability, confirming that market behavior during 2000–2008 was highly volatile — especially around periods of financial instability.

2. Positive Skewness in Market Performance
   With a mean (20.85%) greater than the median (0.33%), the returns distribution appears right-skewed — most daily movements were small or moderate, but occasional extreme gains lifted the average upward.
   This reflects sporadic market rallies amid long stretches of moderate or negative movement, typical of recovery or speculative cycles.

3. Presence of Heavy Tails (Outliers)
   The minimum (–79.5%) and maximum (390.7%) indicate extreme shocks — likely responses to macroeconomic events, policy shifts, or global crises.
   These “tail events” are critical for risk management and stress testing, as they can heavily influence portfolio outcomes.

4. Median Near Zero
   The median daily return of 0.33% suggests that on most trading days, price changes were near neutral — meaning the market oscillated around equilibrium between gains and losses.

Analytical Implications

• Volatility Modeling:
  This distribution supports the use of non-Gaussian models (e.g., GARCH, Student-t, or asymmetric volatility models) to better capture fat tails and skewness.

• Investment Decision-Making:
  Investors should prepare for occasional large swings, as returns show a high dispersion even when average daily changes seem moderate.

• Policy Insight:
  Regulators and economists can interpret this as evidence of financial system sensitivity to macroeconomic shocks, highlighting the importance of liquidity stabilization and investor confidence measures.

Summary Insight

“The daily returns distribution illustrates a market characterized by frequent small adjustments and occasional extreme swings — a reflection of global uncertainty and cyclical economic forces between 2000 and 2008.”

Source & Acknowledgment

Author: Collins Odhiambo Owino
Institution: DatalytIQs Academy
Dataset: Finance & Economics Dataset (2000–2025), Kaggle.
Source: DatalytIQs Academy Research Repository — compiled from open global financial and macroeconomic data (2025).