DEFINITION of 'Homoskedastic'
A statistics term indicating that the variance of the errors over the sample are similar. This type of error structure is most often assumed in statistics, but is not always the case when regression is done. If the variance of the errors around the line of best fit varies much, it will not show a pattern or tendency.
BREAKING DOWN 'Homoskedastic'
For example, in a homoskedastic sample, the variance of errors will not increase when the variables increase.
Suppose you took a sample population of people, some with very high incomes and others with very low incomes. For the variance to be considered homoskedastic, the magnitude of the errors for each term compared to the line of best fit would need to be about the same for each person, regardless of the magnitude of his or her income. In reality this isn't likely to be the case very often.

Heteroskedastic
A measure in statistics that refers to the variance of errors ... 
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Fundamental Analysis
Explaining Variance
Variance is a measurement of the spread between numbers in a data set. 
Investing Basics
Calculating Portfolio Variance
Portfolio variance is a measure of a portfolioâ€™s volatility, and is a function of two variables. 
Fundamental Analysis
Exploring The Exponentially Weighted Moving Average
Learn how to calculate a metric that improves on simple variance. 
Economics
Understanding Statistics
Statistics provide the means to analyze data and then summarize it into a numerical form. 
Fundamental Analysis
How Does Sampling Work?
Sampling is a term used in statistics that describes methods of selecting a predefined representative number of data from a larger data population. 
Economics
What is Systematic Sampling?
Systematic sampling is similar to random sampling, but it uses a pattern for the selection of the sample. 
Fundamental Analysis
Calculating Tracking Error
Tracking error is the difference between the return on a portfolio or fund, and the benchmark it is expected to mirror (or track). 
Fundamental Analysis
What is a Representative Sample?
In statistics, a representative sample accurately represents the makeup of various subgroups in an entire data pool. 
Investing
What is Descriptive Statistics?
Descriptive statistics is the term applied to meaningful data analysis. 
Insurance
What Does Errors and Omissions Insurance Cover?
Errors and omissions insurance protects companies and individuals against claims made by clients for inadequate work or negligent actions.

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