Annualised return
What yearly rate does a short period imply, and why can one week not be trusted to support it?
In plain words
An annualised return restates a period's gain or loss as the rate that would apply if it repeated for a full year. A weekly return is compounded across the year, so a small weekly move scales into a very large yearly figure.
Why it matters
Annualising makes different holding periods comparable, but it assumes the period is representative. On a volatile asset, one week's move can carry a whole month's signal, so the implied yearly rate can misstate what a position realistically earns or risks.
In a real week: BTC, week of 29 July 2019
BTC rose 14.54% in the week of 29 July 2019, from 9541.54 to 10929.23. Repeating that weekly pace for 52 weeks would imply an enormous yearly rate. The weeks before it did not support that pace: 5.09%, -10.83%, 4.08% and -9.90%, with this week at the 87.0th percentile of its 76 weeks of history and volume below the prior 12-week average.
A common mistake
Treating a single strong week's annualised figure as an expected yearly return. The math is correct; the assumption that one week repeats is what fails.