DEFINITION of 'Central Limit Theorem  CLT'
A statistical theory that states that given a sufficiently large sample size from a population with a finite level of variance, the mean of all samples from the same population will be approximately equal to the mean of the population. Furthermore, all of the samples will follow an approximate normal distribution pattern, with all variances being approximately equal to the variance of the population divided by each sample's size.
INVESTOPEDIA EXPLAINS 'Central Limit Theorem  CLT'
This statistical theory is very useful when examining returns for a given stock or index because it simplifies many analysis procedures. An appropriate sample size depends on the data available, but generally speaking, having a sample size of at least 50 observations is sufficient. Due to the relative ease of generating financial data, it is often easy to produce much larger sample sizes.

Variance
The spread between numbers in a data set, measuring Variance ... 
Normal Distribution
A probability distribution that plots all of its values in a ... 
Probability Distribution
A statistical function that describes all the possible values ... 
Sampling Error
A statistical error to which an analyst exposes a model simply ... 
NonSampling Error
A statistical error caused by human error to which a specific ... 
Binomial Distribution
A probability distribution that summarizes the likelihood that ...

Fundamental Analysis
Find The Right Fit With Probability Distributions
Discover a few of the most popular probability distributions and how to calculate them. 
Mutual Funds & ETFs
5 Ways To Measure Mutual Fund Risk
These statistical measurements highlight how to mitigate risk and increase rewards. 
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". 
Fundamental Analysis
Monte Carlo Simulation With GBM
Learn to predict future events through a series of random trials. 
Economics
Understanding Perpetuity
Perpetuity means without end. In finance, a perpetuity is a flow of money that will be received on a regular basis without a specified ending date. 
Fundamental Analysis
What is a Null Hypothesis?
In statistics, a null hypothesis is assumed true until proven otherwise. 
Investing
How to Use Stratified Random Sampling
Stratified random sampling is a technique best used with a sample population easily broken into distinct subgroups. Samples are then taken from each subgroup based on the ratio of the subgroup’s ... 
Economics
How A Limited Government Affects A Country's Finances
Countries with limited governments have fewer laws about what individuals and businesses can and can’t do. What's the net result? 
Fundamental Analysis
Lognormal and Normal Distribution
When and why do you use lognormal distribution or normal distribution for analyzing securities? Lognormal for stocks, normal for portfolio returns. 
Investing Basics
How Does Goodwill Affect Financial Statements?
Goodwill is a bit of a paradoxintangible, yet it is recorded as an asset on the purchasing company's balance sheet.