One often reasonable rule for the number of bins is that if n is about 2k, use k+1 bins. Here n = 50, which is between 32 and 64, the fifth and sixth powers of 2. The rule would suggest six or seven bins. Using Excel or Minitab, make histograms with 5, 7 and 9 bins. Compare them. Which seems to show the overall pattern best ? Making a succession of histograms with different bin widths can be help in formulating a mixture model for the data.
2. Stock Rates of Return: Crude Oil
Given a price series {P(t)}, the rate of return
is [P(t+1) - P(t)]/P(t),
which is approximately ln P(t+1)/P(t),
or
ln P(t+1) - ln P(t) . This is often
multiplied by 100 to correspond to percent. This logarithmic approximation
to the percentage RORs of the crude-oil nearest month futures prices is
in the
worksheet
in the column 100*DIFF.
Make histograms of 100*DIFF
using bin widths of say, 1.5, 2.0 and 2.5, or whatever best exhibits the
information in the data.