DEFINITION of 'Bonferroni Test'
A type of multiple comparison test used in statistical analysis. When an experimenter performs enough tests, he or she will eventually end up with a result that shows statistical significance, even if there is none. If a particular test yields correct results 99% of the time, running 100 tests could lead to a false result somewhere in the mix. The Bonferroni test attempts to prevent data from incorrectly appearing to be statistically significant by lowering the alpha value.
The Bonferroni test, also known as the "Bonferroni correction" or "Bonferroni adjustment" suggests that the "p" value for each test must be equal to alpha divided by the number of tests.
INVESTOPEDIA EXPLAINS 'Bonferroni Test'
The Bonferroni test is named for the Italian mathematician who developed it, Carlo Emilio Bonferroni (1892–1960). Other types of multiple comparison tests include Scheffe's test and the TukeyKramer method test. A criticism of the Bonferroni test is that it is too conservative and may fail to catch some significant findings.

Scheffe's Test
A statistical test that is used to make unplanned comparisons, ... 
Sampling Error
A statistical error to which an analyst exposes a model simply ... 
Normal Distribution
A probability distribution that plots all of its values in a ... 
Probability Distribution
A statistical function that describes all the possible values ... 
Correlation
In the world of finance, a statistical measure of how two securities ... 
Statistically Significant
The likelihood that a result or relationship is caused by something ...

Are all fixed costs considered sunk costs?
In accounting, finance and economics, all sunk costs are fixed costs. However, not all fixed costs are considered to be sunk. ... Read Full Answer >> 
What is the variance/covariance matrix or parametric method in Value at Risk (VaR)?
The parametric method, also known as the variancecovariance method, is a risk management technique for calculating the value ... Read Full Answer >> 
What is backtesting in Value at Risk (VaR)?
The value at risk is a statistical risk management technique that monitors and quantifies the risk level associated with ... Read Full Answer >> 
How much variance should an investor have in an indexed fund?
An investor should have as much variance in an indexed fund as he is comfortable with. Variance is the measure of the spread ... Read Full Answer >> 
Can the correlation coefficient be used to measure dependence?
The correlation coefficient can be used to measure the linear dependence between two random variables. The most common correlation ... Read Full Answer >> 
How do you calculate variance in Excel?
To calculate statistical variance in Microsoft Excel, use the builtin Excel function VAR. Given a set of numbers value1 ... Read Full Answer >>

Markets
The Uses And Limits Of Volatility
Check out how the assumptions of theoretical risk models compare to actual market performance. 
Active Trading Fundamentals
Bet Smarter With The Monte Carlo Simulation
This technique can reduce uncertainty in estimating future outcomes. 
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". 
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". 
Options & Futures
Multivariate Models: The Monte Carlo Analysis
This decisionmaking tool integrates the idea that every decision has an impact on overall risk. 
Fundamental Analysis
Explaining Expected Return
The expected return is a tool used to determine whether or not an investment has a positive or negative average net outcome. 
Economics
Understanding the Fisher Effect
The Fisher effect states that the real interest rate equals the nominal interest rate minus the expected inflation rate. 
Fundamental Analysis
Explaining the Geometric Mean
The average of a set of products, the calculation of which is commonly used to determine the performance results of an investment or portfolio. 
Investing
The Labor Market Recovery’s Missing Ingredient
Job creation is running at the fastest pace since the 90s, and there is some evidence that wage growth is finally starting to accelerate, albeit modestly. 
Trading Strategies
Best Undergraduate Degrees For Day Traders
We look at some popular undergrad majors for those wanting to begin a career in the exciting world of fastpaced trading.