DEFINITION of 'Heteroskedastic'
A measure in statistics that refers to the variance of errors over a sample. Heteroskedasticity is present in samples where random variables display differing variabilities than other subsets of the variables. Such results can cause errors in regression analysis and other statistical measures in which statistical measures can be incorrectly justified.
INVESTOPEDIA EXPLAINS 'Heteroskedastic'
Most financial instruments, such as stocks, follow a heteroskedastic error pattern. For example, in regression, a mathematical relationship between a stock and some other type of measure is to be discovered over a period of time. The error found between the line of best fit and the actual data point will vary; for instance, as each variable gets larger the error may increase.
RELATED TERMS

Line Of Best Fit
A straight line drawn through the center of a group of data points ... 
Poisson Distribution
A statistical distribution showing the frequency probability ... 
Regression
A statistical measure that attempts to determine the strength ... 
Homoskedastic
A statistics term indicating that the variance of the errors ... 
Autocorrelation
A mathematical representation of the degree of similarity between ... 
Sampling Error
A statistical error to which an analyst exposes a model simply ...
Related Articles

Budgeting
The P/E Ratio: A Good MarketTiming Indicator
Check out the returns this newer technical analysis tool would've yielded over the period from 1920 to 2003. 
Technical Indicators
The Gann Studies
Learn why this pioneer of technical analysis believed it's possible to predict the future. 
Personal Finance
What is the average salary for an accountant?
Learn about the average salaries of various accounting positions, and see the difference that an accounting degree makes in attaining higher wages. 
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. 
Economics
Where is cost of living lowest in the world?
Learn how the cost of living is the lowest in India based on numbers derived from the CPI and organizations like Expatistan and Numbeo. 
Economics
Is the Bureau of Labor Statistics accurate?
Read this brief analysis of the accuracy of Bureau of Labor Statistics, including a summary of the types of reports issued and how they are compiled. 
Investing Basics
Using Normal Distribution Formula To Optimize Your Portfolio
Normal or bell curve distribution can be used in portfolio theory to help portfolio managers maximize return and minimize risk. 
Economics
How does the Bureau of Labor Statistics define contingent workers?
Discover how contingent workers are a significant part of the labor force and are defined as persons who do not expect their jobs to last. 
Economics
How does the Bureau of Labor Statistics determine the Consumer Price Index (CPI)?
Changes in the average price level of more than 200 goods and services across the U.S. economy are used to determine the Consumer Price Index, or CPI. 
Economics
How is the cost of living index calculated?
Discover how calculations for cost of living indexes are made based on the average prices of common goods and services between different regions.