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.

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 ... 
Sampling Error
A statistical error to which an analyst exposes a model simply ... 
Autocorrelation
A mathematical representation of the degree of similarity between ... 
Regression
A statistical measure that attempts to determine the strength ... 
Homoskedastic
A statistics term indicating that the variance of the errors ...

What assumptions are made when conducting a ttest?
The common assumptions made when doing a ttest include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >> 
What are some of the more common types of regressions investors can use?
The most common types of regression an investor can use are linear regressions and multiple linear regressions. Regressions ... Read Full Answer >> 
What types of assets produce negative portfolio variance?
Assets that have a negative correlation with each other produce negative portfolio variance. Variance is one measure of the ... Read Full Answer >> 
When is it better to use systematic over simple random sampling?
Under simple random sampling, a sample of items is chosen randomly from a population, and each item has an equal probability ... Read Full Answer >> 
What are some common financial sampling methods?
There are two areas in finance where sampling is very important: hypothesis testing and auditing. The type of sampling methods ... Read Full Answer >> 
How can I measure portfolio variance?
Portfolio variance measures the dispersion of returns of a portfolio. It is calculated using the standard deviation of each ... Read Full Answer >>

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. 
Economics
Explaining the Liquidity Coverage Ratio
The liquidity coverage ratio requires banks and other financial institutions to hold enough cash and liquid assets on hand to weather market stress. 
Fundamental Analysis
Calculating Valuation
Valuation is the process of determining what an asset is worth. 
Economics
Will the Selloff in China Hurt the Global Economy?
Though China is the world’s second largest economy, its volatility in the stock market is unlikely to have an impact on the global or Chinese economy. 
Fundamental Analysis
Understanding Qualitative Analysis
Qualitative analysis is a general term describing the nonmathematical scrutiny used by investors and managers to make investment and business decisions. 
Economics
Signs The U.S. Recovery Is Solid
Many market observers lately have been making some pretty pessimistic evaluations of the U.S. economy, declaring that it’s stagnating and soft. 
Fundamental Analysis
Explaining the Monte Carlo Simulation
Monte Carlo simulation is an analysis done by running a number of different variables through a model in order to determine the different outcomes. 
Fundamental Analysis
Explaining the Empirical Rule
The empirical rule provides a quick estimate of the spread of data in a normal statistical distribution. 
Economics
Explaining Demographics
Demographics is the study and categorization of people based on factors such as income level, education, gender, race, age, and employment.