Multivariate Model

AAA

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.

INVESTOPEDIA EXPLAINS '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
  1. Stock Option

    A privilege, sold by one party to another, that gives the buyer ...
  2. Portfolio Manager

    The person or persons responsible for investing a mutual, exchange-traded ...
  3. Monte Carlo Simulation

    A problem solving technique used to approximate the probability ...
  4. Investment

    An asset or item that is purchased with the hope that it will ...
  5. Cash Flow

    1. A revenue or expense stream that changes a cash account over ...
  6. Strike Width

    The difference between the strike price of an option and the ...
RELATED FAQS
  1. How are double exponential moving averages applied in technical analysis?

    Double exponential moving averages (DEMAS) are commonly used in technical analysis like any other moving average indicator ... Read Full Answer >>
  2. How do you know where on the oscillator you should make a purchase or sale?

    Common oscillator readings to consider making a buy or sale are below 20 or above 80, respectively. More aggressive investors ... Read Full Answer >>
  3. What are some of the more common types of regressions investors can use?

    The most common types of regression an investor can use are linear regressions and multiple linear regressions. Regressions ... Read Full Answer >>
  4. What are the alert zones in a Fibonacci retracement?

    The most commonly used Fibonacci retracement alert levels are at 38.2% and 61.8%. A 50% retracement level is also commonly ... Read Full Answer >>
  5. What types of assets produce negative portfolio variance?

    Assets that have a negative correlation with each other produce negative portfolio variance. Variance is one measure of the ... Read Full Answer >>
  6. How was the Fibonacci retracement developed for use in finance?

    The use of Fibonacci retracements in stock trading was popularized by noted technical analysts W.D. Gann and R.N. Elliott. ... Read Full Answer >>
Related Articles
  1. Investing Basics

    The Changing Role Of Equity Research

    Research creates a division of labor that makes the market more efficient. Learn how its role has changed.
  2. Options & Futures

    Finding Undiscovered Stocks

    Wall Street tends to focus on large cap stocks, leaving other stocks under-followed and undervalued.
  3. Investing Basics

    What Are A Stock's "Fundamentals"?

    The investing world loves to talk about fundamentals, but do you know what it means?
  4. Fundamental Analysis

    Taking Stock Of Discounted Cash Flow

    Learn how and why investors are using cash flow-based analysis to make judgments about company performance.
  5. Investing

    Spotting Cash Cows

    We show you why some of these companies stand apart from the herd.
  6. Fundamental Analysis

    20-Year Treasury Bond ETF Trading Strategies

    iShares 20-Year Treasury Bond ETF offers a highly liquid equity alternative to direct bond exposure.
  7. Technical Indicators

    How To Interpret The Volume Zone Oscillator

    Introduced in 2009, the Volume Zone Oscillator (VZO) is gaining traction with traders and technicians.
  8. Stock Analysis

    Where Does Yahoo (YHOO) Go From Here?

    Yahoo operates in a competitive environment, but if it makes the right deals there's no reason why it can't thrive.
  9. Trading Strategies

    Uncovering Evidence Of Sector Rotation

    Stalk ETF performance lists over several weeks to uncover hidden institutional buying and selling strategies.
  10. Chart Advisor

    Stock Chart Patterns to Keep an Eye On

    Some of these stocks are exhibiting big chart patterns, so a breakout is likely to be significant.

You May Also Like

Hot Definitions
  1. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  2. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  3. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
  4. Sin Tax

    A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. ...
  5. Grandfathered Activities

    Nonbank activities, some of which would normally not be permissible for bank holding companies and foreign banks in the United ...
  6. Touchline

    The highest price that a buyer of a particular security is willing to pay and the lowest price at which a seller is willing ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!