DEFINITION of 'Multivariate Model'
A popular statistical tool that uses multiple variables to forecast possible investment outcomes. Multivariate models predict outcomes of situations that are affected by more than one variable, and are widely used in the financial world.
Next Up
BREAKING DOWN 'Multivariate Model'
Analysts use them to estimate cash flows and evaluate new product ideas. Portfolio managers and financial advisors use them to predict the impact of individual investments on total portfolio returns. In the insurance industry, multivariate models help insurers estimate risk. Analysts also use this type of model to value stock options.
RELATED TERMS

Endogenous Variable
A classification of a variable generated by a statistical model ... 
Model Risk
A type of risk that occurs when a financial model used to measure ... 
Default Model
A type of model used by financial institutions to determine the ... 
Error Term
A variable in a statistical and/or mathematical model, which ... 
Random Variable
A variable whose value is unknown or a function that assigns ... 
Variability
The extent to which data points in a statistical distribution ...
Related Articles

Fundamental Analysis
Scenario Analysis Provides Glimpse Of Portfolio Potential
This statistical method estimates how far a stock might fall in a worstcase scenario. 
Investing
Understanding Financial Models
A financial model is a representation of some aspects of a firm or given security. It uses historical numbers to create calculations that inform financial recommendations or predict future financial ... 
Economics
Understanding Regression
Regression is a statistical analysis that attempts to predict the effect of one or more variables on another variable. 
Economics
Understanding Forecasting
Forecasting is the use of historical data to predict the future. 
Investing News
How Do Professionals Forecast Crude Oil Prices?
Discover how the future price of oil is predicted with a weighted combination of mathematical tools. Economists largely use five main models as their base. 
Entrepreneurship
Calculating (Small) Company Credit Risk
Determining creditworthiness of smaller and mediumsized corporations isn't as easy as for larger companies, but these tips can help. 
Trading Systems & Software
Build a Profitable Trading Model In 7 Easy Steps
Trading models can provide a powerful tool for building profit. Traders can use and customize existing trading models or build an original model. This article provides seven steps to building ... 
Economics
What is a Business Model?
Business model is the term for a company’s plan as to how it will earn revenue. 
Retirement
Variable Annuity Basics
Find out how variable annuities can help you plan for retirement by offering the returns of the stock market with the guarantee of insurance. 
Economics
How Do Companies Forecast Oil Prices?
Read about the different forecasting methods that businesses use to predict future crude oil prices, and why it's so difficult to guess correctly.
RELATED FAQS

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 >> 
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 >> 
What is the point of developing a business model?
Learn some of the benefits of developing a business model and how business models are used. Consider an example of business ... Read Answer >> 
What is variable life insurance?
Variable life insurance is a permanent life insurance policy with an investment component. The policy has a cash value account, ... Read Answer >> 
Do production costs include all fixed and variable costs?
Learn more about fixed and variable costs and how they affect production costs. Understanding how to graph these costs can ... Read Answer >> 
How are variable annuities regulated?
Discover the various rules that the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority ... Read Answer >>