Histograms

Introduction to Python for Finance

Adina Howe

Instructor

Why histograms for financial analysis?

histogram

Histograms and Data

Is your data skewed?
Is your data centered around the average?
Do you have any abnormal data points (outliers) in your data?

Histograms and matplotlib.pyplot

import matplotlib.pyplot as plt
plt.hist(x=prices, bins=3)
plt.show()

hist1

Changing the number of bins

import matplotlib.pyplot as plt
plt.hist(prices, bins=6)
plt.show()

hist2

Normalizing histogram data

import matplotlib.pyplot as plt
plt.hist(prices, bins=6, normed=1)
plt.show()

normed

Layering histograms on a plot

import matplotlib.pyplot as plt
plt.hist(x=prices, bins=6, normed=1)
plt.hist(x=prices_new, bins=6, normed=1)
plt.show()

Histogram result

two_hist_normed

Alpha: Changing transparency of histograms

import matplotlib.pyplot as plt
plt.hist(x=prices, bins=6, normed=1, alpha=0.5)
plt.hist(x=prices_new, bins=6, normed=1, alpha=0.5)
plt.show()

Histogram result

two-hist-transparent

Adding a legend

import matplotlib.pyplot as plt
plt.hist(x=prices, bins=6, normed=1, alpha=0.5, label="Prices 1")
plt.hist(x=prices_new, bins=6, normed=1, alpha=0.5, label="Prices New")
plt.legend()
plt.show()

Histogram result

pretty hist

Let's practice!

Introduction to Python for Finance