Markov Analysis

AAA

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.

INVESTOPEDIA EXPLAINS '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. Value At Risk - VaR

    A statistical technique used to measure and quantify the level ...
  2. Monte Carlo Simulation

    A problem solving technique used to approximate the probability ...
  3. Probability Distribution

    A statistical function that describes all the possible values ...
  4. Scenario Analysis

    The process of estimating the expected value of a portfolio after ...
  5. Stochastic Modeling

    A method of financial modeling in which one or more variables ...
  6. Compound Annual Growth Rate - CAGR

    The year-over-year growth rate of an investment over a specified ...
Related Articles
  1. Find The Right Fit With Probability ...
    Fundamental Analysis

    Find The Right Fit With Probability ...

  2. Bet Smarter With The Monte Carlo Simulation
    Active Trading Fundamentals

    Bet Smarter With The Monte Carlo Simulation

  3. Financial Forecasting: The Bayesian ...
    Forex Education

    Financial Forecasting: The Bayesian ...

  4. Introduction To Stationary And Non-Stationary ...
    Active Trading

    Introduction To Stationary And Non-Stationary ...

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center