Bonferroni Test

AAA

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 Tukey-Kramer method test. A criticism of the Bonferroni test is that it is too conservative and may fail to catch some significant findings.



RELATED TERMS
  1. Scheffe's Test

    A statistical test that is used to make unplanned comparisons, ...
  2. Probability Distribution

    A statistical function that describes all the possible values ...
  3. Correlation

    In the world of finance, a statistical measure of how two securities ...
  4. Statistically Significant

    The likelihood that a result or relationship is caused by something ...
  5. Hypothesis Testing

    A process by which an analyst tests a statistical hypothesis. ...
  6. P-Value

    The level of marginal significance within a statistical hypothesis ...
Related Articles
  1. Markets

    The Uses And Limits Of Volatility

    Check out how the assumptions of theoretical risk models compare to actual market performance.
  2. Active Trading Fundamentals

    Bet Smarter With The Monte Carlo Simulation

    This technique can reduce uncertainty in estimating future outcomes.
  3. 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".
  4. 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".
  5. Options & Futures

    Multivariate Models: The Monte Carlo Analysis

    This decision-making tool integrates the idea that every decision has an impact on overall risk.
  6. Economics

    Where do funds report their r-squared?

    Learn where to find R-squared calculations for mutual funds. Explore R-squared, Alpha and Beta and how these calculations measure securities' performance.
  7. Fundamental Analysis

    How do you calculate r-squared in Excel?

    Calculate R-squared in Microsoft Excel by creating two data ranges to correlate. Use the Correlate formula to correlate both sets of data, or x and y.
  8. Fundamental Analysis

    What are the most common issues with Serial Correlation in stocks?

    Read about the concept of serial correlation in stock returns, and learn why market analysts are divided about the efficacy of trading based on stock patterns.
  9. Bonds & Fixed Income

    How do I calculate yield to maturity of a zero coupon bond?

    Find out how to calculate the yield to maturity for a zero coupon bond, and see why this calculation is more simple than a bond with a coupon.
  10. Trading Strategies

    How far back in a stock's history should you go when gauging its volatility?

    Discover why it can be difficult for investors to figure out how far back to go into a stock's history when gauging its volatility.

You May Also Like

Hot Definitions
  1. Weather Insurance

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

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

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

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  5. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  6. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
Trading Center