Final answer:
To calculate the sample covariance between returns, find the mean of each set of returns, subtract the mean from each return, multiply the differences together, sum them up, and divide by the total number of data points minus one.
Step-by-step explanation:
To calculate the sample covariance between returns, you first need to find the mean or average return for each set of data. Then, for each pair of corresponding returns, subtract the mean of the first set from the first return and the mean of the second set from the second return. Multiply these differences together and sum them up. Finally, divide this sum by the total number of data points minus one.
An example calculation would be:
-