Mastering Python for Finance - Second Edition

A quantile-quantile plot

A Q-Q (quantile-quantile) plot is a probability distribution plot, where the quantiles of two distributions are plotted against each other. If the distributions are linearly related, the points in the Q-Q plot will lie along a line. Compared to histograms, Q-Q plots help us to visualize points that lie outside the line for positive and negative skews, as well as excess kurtosis.

The probplot() of scipy.stats helps us to calculate and show quantiles for a probability plot. A best-fit line for the data is also drawn. In the following example, we use the last prices of the ABN stock dataset and compute the daily percentage change for charting a Q-Q plot:

In [ ]:    %matplotlib inline    import quandl from scipy import stats ...