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  3. Introduction to Portfolio Risk Management in Python

Exercise

Third moment: Skewness

To calculate the third moment, or skewness of a returns distribution in Python, you can use the skew() function from scipy.stats.

Remember that a negative skew is a right-leaning curve, while positive skew is a left-leaning curve. In finance, you would tend to want positive skewness, as this would mean that the probability of large positive returns is unusually high, and the negative returns are more closely clustered and predictable.

StockPrices from the previous exercise is available in your workspace.

Instructions

100 XP
  • Import skew from scipy.stats.
  • Drop missing values in the 'Returns' column to prevent errors.
  • Calculate the skewness of clean_returns.