Analysis Of Variances - ANOVA

AAA

DEFINITION of 'Analysis Of Variances - ANOVA'

An analysis of the variation between all of the variables used in an experiment. Analysis of variance is used in finance in several different ways, such as to forecasting the movements of security prices by first determining which factors influence stock fluctuations. This analysis can provide valuable insight into the behavior of a security or market index under various conditions.

INVESTOPEDIA EXPLAINS 'Analysis Of Variances - ANOVA'

This type of analysis attempts to break down the various underlying factors that determine the price of securities as well as market behavior. For example, it could possibly show how much of a security's rise or fall is due to changes in interest rates. A t-test and f-test is used to analyze the results of an analysis of variance test to determine which variables are of statistical significance.

RELATED TERMS
  1. Variance

    The spread between numbers in a data set, measuring Variance ...
  2. T-Test

    A statistical examination of two population means. A two-sample ...
  3. Balanced ANOVA

    A statistical test used to determine whether or not different ...
  4. Standard Deviation

    1. A measure of the dispersion of a set of data from its mean. ...
  5. Mean

    The simple mathematical average of a set of two or more numbers. ...
  6. Covariance

    A measure of the degree to which returns on two risky assets ...
Related Articles
  1. Bonds & Fixed Income

    Find The Highest Returns With The Sharpe Ratio

    Learn how to follow the efficient frontier to increase your chances of successful investing.
  2. Active Trading Fundamentals

    How To Convert Value At Risk To Different Time Periods

    Volatility is not the only way to measure risk. Learn about the "new science of risk management".
  3. Options & Futures

    An Introduction To Value at Risk (VAR)

    Volatility is not the only way to measure risk. Learn about the "new science of risk management".
  4. Active Trading

    Modern Portfolio Theory: Why It's Still Hip

    See why investors today still follow this old set of principles that reduce risk and increase returns through diversification.
  5. Trading Strategies

    How can retirees protect their wealth in a bear market?

    Look at some helpful hints about how to protect your retirement nest egg when the stock market is underperforming or the economy is in recession.
  6. Economics

    What's the relationship between r squared and beta?

    Learn about the relationship between R-squared and Beta. Explore how the concepts are related and often used in conjunction with portfolio Alpha.
  7. Economics

    What are some limitations of the consumer price index (CPI)?

    Explore some of the basic limitations of the widely used economic indicator, the consumer price index, or CPI, and examine the criticism of its accuracy.
  8. Economics

    Is the consumer price index (CPI) a cost of living index?

    Explore the consumer price index (CPI) and understand why it is not an actual cost of living index although it is often identified as one.
  9. Fundamental Analysis

    What is the affect of the invisible hand on consumers?

    Discover how consumers help initiate and benefit from the invisible hand of the market, which naturally coordinates trade in an exchange economy.
  10. Economics

    How does the invisible hand phenomenon affect investment markets?

    Read about how the invisible hand of the market coordinates investment markets and provides social benefit and why its effects are distorted along the way.

You May Also Like

Hot Definitions
  1. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  2. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  3. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  4. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  5. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  6. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
Trading Center