Joseph Effect

AAA

DEFINITION of 'Joseph Effect'

The idea that movements in a time series tend to be part of larger trends and cycles more often than they are completely random. The Joseph Effect is quantified by the Hurst component, where movements fall between a Hurst range of 0 to 1. The term was coined by Benoit Mandelbrot.

INVESTOPEDIA EXPLAINS 'Joseph Effect'

If a series of movements is calculated to be between 0 and 0.5 in the Hurst range, then the movement is larger and more random than what are thought to be normal random movements. If the measure is 0.5, then the movements are thought to be random movements. If it is between 0.5 and 1, the movements are thought to be part of a long-term trend. The term "Joseph Effect" alludes to an Old Testament story about Joseph, where Egypt would experience seven years of feast followed by seven years of famine.

RELATED TERMS
  1. Chartist

    An individual who uses charts or graphs of a security's historical ...
  2. Trend

    The general direction of a market or of the price of an asset. ...
  3. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  4. Altman Z-Score

    The output of a credit-strength test that gauges a publicly traded ...
  5. Mobile First Strategy

    Mobile first strategy is trend in website development where designing ...
  6. Fintech

    Fintech is a portmanteau of financial technology that describes ...
RELATED FAQS
  1. How does fundamental analysis differ from technical analysis?

    Technical analysis and fundamental analysis are two distinct approaches to equity investment. Fundamental analysis is typically ... Read Full Answer >>
  2. What is the difference between variance and standard deviation?

    Variance and standard deviation are both concepts that help statisticians and financial professionals understand differences ... Read Full Answer >>
  3. What variables are most important when making a prediction through sensitivity analysis?

    Sensitivity analysis is used in corporate finance and other fields as a means of making predictions based on changes in variables. ... Read Full Answer >>
  4. What types of stocks have a small difference between bid and ask prices?

    Generally, stocks that offer high liquidity have tight bid-ask spreads. Stocks that have a high volume and trade on a daily ... Read Full Answer >>
  5. Is it better to use fundamental analysis, technical analysis or quantitative analysis ...

    The most common methods that investors use to analyze the benefits and risks associated with long-term investment in the ... Read Full Answer >>
  6. What is the difference between expected return and variance?

    The expected return and variance are two statistical measures for analyzing investment portfolios. The expected return is ... Read Full Answer >>
Related Articles
  1. Fundamental Analysis

    Where's The Market Headed Now?

    Whether up, down or sideways, learn about some of the factors that drive stock market moves.
  2. Charts & Patterns

    Market Reversals And How To Spot Them

    The sushi-roll indicator may help lower the risk of trying to pick market tops and bottoms.
  3. Charts & Patterns

    Are These the Top 3 Value Stocks of 2015?

    A look at three value plays for the long-term investor.
  4. Economics

    What are Pork-Barrel Politics?

    Pork-barrel politics is a form of patronage whereby politicians favor their constituents in exchange for benefits such as campaign donations and votes.
  5. Investing Basics

    What is the Rule of 70?

    The rule of 70 is an easy way to calculate how many years it will take for an investment to double in size.
  6. Fundamental Analysis

    Explaining Variance

    Variance is a measurement of the spread between numbers in a data set.
  7. Chart Advisor

    Defensive? Eye Infrastructure via the IGF ETF

    Investing in infrastructure is not exactly the flavor of the day, but it may prove useful to turn toward defensive sectors in case of a market downturn.
  8. Trading Strategies

    Market Timing Tips & Rules You Should Know

    Market timing rules benefit investments by finding the best prices and times to take exposure and book profits.
  9. Chart Advisor

    Commodity Traders Are Using This ETF To Invest In Livestock

    Strategic traders should be paying attention to the livestock markets.
  10. Trading Strategies

    Trading Risks And Rewards In Your Favor

    Measure reward and risk targets before taking a trade, and let those numbers guide your open position.

You May Also Like

Hot Definitions
  1. Coupon

    The interest rate stated on a bond when it's issued. The coupon is typically paid semiannually. This is also referred to ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Redemption

    The return of an investor's principal in a fixed income security, such as a preferred stock or bond; or the sale of units ...
  4. Standard Error

    The standard deviation of the sampling distribution of a statistic. Standard error is a statistical term that measures the ...
  5. Capital Stock

    The common and preferred stock a company is authorized to issue, according to their corporate charter. Capital stock represents ...
Trading Center