Markov Analysis

DEFINITION of 'Markov Analysis'

A method used to forecast the value of a variable whose future value is independent of its past history. The technique is named after Russian mathematician Andrei Andreyevich Markov, who pioneered the study of stochastic processes, which are processes that involve the operation of chance. The Markov Analysis introduces a method for forecasting random variables.

BREAKING DOWN 'Markov Analysis'

Markov analysis has a number of applications in the business world. Two common applications are in estimating the proportion of a company's accounts receivables that will become bad debts and forecasting future brand loyalty of current customers.

RELATED TERMS
  1. Sensitivity Analysis

    Sensitivity analysis is a technique used to determine how different ...
  2. Random Variable

    A variable whose value is unknown or a function that assigns ...
  3. Stochastic Volatility - SV

    A statistical method in mathematical finance in which volatility ...
  4. Shadowing

    The process of creating values for variables that don't rely ...
  5. Stochastic Modeling

    A method of financial modeling in which one or more variables ...
  6. Autoregressive

    A stochastic process used in statistical calculations in which ...
Related Articles
  1. Investing

    The Basics Of Business Forecasting

    Discover the methods behind financial forecasts and the risks inherent when we seek to predict the future.
  2. Trading

    Triple Screen Trading System - Part 5

    Stochastics can be very effective as the second screen in this three-part system. Find out how to use this popular oscillator.
  3. Markets

    Is Now the Right Time to Buy Russian Stocks?

    Examine the state of the Russian equity market entering 2016 and learn why adding Russian stocks to your investment portfolio may be a good idea.
  4. Trading

    Do You Have The Right Settings On Your Stochastic?

    Use these helpful tips to unlock Stochastics' full potential.
  5. Investing

    Scenario Analysis Provides Glimpse Of Portfolio Potential

    This statistical method estimates how far a stock might fall in a worst-case scenario.
  6. Investing

    The Basics Of Business Forecasting

    Whether business forecasts pertain to finances, growth, or raw materials, it’s important to remember that a forecast is little more than an informed guess.
  7. Markets

    Understanding Regression

    Regression is a statistical analysis that attempts to predict the effect of one or more variables on another variable.
  8. Markets

    Understanding Forecasting

    Forecasting is the use of historical data to predict the future.
  9. Trading

    Know the Forces At Play Behind The Buy/Sell Cycles

    Weekly Stochastics uncovers patterns of buying and selling pressure that can be predicted and capitalized upon by observant investors and traders.
  10. Trading

    What's a Sensitivity Analysis?

    Sensitivity analysis is used in financial modeling to determine how one variable (the target variable) may be affected by changes in another variable (the input variable).
RELATED FAQS
  1. What variables are most important when making a prediction through sensitivity analysis?

    Explore sensitivity analysis and how this method considers different variables to determine a course of action based on statistical ... Read Answer >>
  2. What is the difference between fast and slow stochastics in technical analysis?

    The main difference between fast and slow stochastics is summed up in one word: sensitivity. The fast stochastic is more ... Read Answer >>
  3. What is the difference between Stochastic Oscillator & Stochastic Momentum Index?

    Discover how the stochastic oscillator and the Stochastic Momentum Index differ and why the latter is considered a more refined ... Read Answer >>
  4. What are the differences between Relative Strength Index (RSI) & Stochastic Oscillator?

    Learn about some of the main differences between the relative strength index and the stochastic oscillator, two well-known ... Read Answer >>
  5. What is the difference between financial forecasting and financial modelling?

    Understand the difference between financial forecasting and financial modeling, and learn why a company should conduct both ... Read Answer >>
  6. How is the ability to perform Activities of Daily Living (ADL) measured?

    Find out how to apply sensitivity analysis to your investment decisions, why sensitivity analysis might be useful and what ... Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center