Why is the cumulative returns not start from 0?
Course Name: Financial Time Series Analysis for Trading, Section No: 14, Unit No: 3, Unit type: Notebook
Cumulative returns do not start from zero because they represent the total percentage change in value from the initial investment, not the absolute return at a specific moment. It starts from 1 (or 100%) of the initial capital and properly accounts for compounding effects, as each day’s return builds upon the previous cumulative value.