Nonparametric Method

DEFINITION of 'Nonparametric Method'

A method commonly used in statistics to model and analyze ordinal or nominal data with small sample sizes. Unlike parametric models, nonparametric models do not require the modeler to make any assumptions about the distribution of the population, and so are sometimes referred to as a distribution-free method.

BREAKING DOWN 'Nonparametric Method'

Typically, this method will be used when the data has an unknown distribution, is non-normal, or has a sample size so small that the central limit theorem can't be applied to assume the distribution.

RELATED TERMS
  1. Nonparametric Statistics

    A statistical method wherein the data is not required to fit ...
  2. Sampling Error

    A statistical error to which an analyst exposes a model simply ...
  3. Statistics

    A type of mathematical analysis involving the use of quantified ...
  4. Stochastic Modeling

    A method of financial modeling in which one or more variables ...
  5. Probability Density Function - ...

    A statistical measure that defines a probability distribution ...
  6. Sampling

    A process used in statistical analysis in which a predetermined ...
Related Articles
  1. Investing Basics

    Economic Indicators That Do-It-Yourself Investors Should Know

    Understanding these investing tools will put the market in your hands.
  2. Economics

    Does High GDP Mean Economic Prosperity?

    GDP is the typical indicator used to measure a country's economic health. Find out what it fails to reveal and how the Genuine Progress Indicator can help.
  3. Economics

    Why The Consumer Price Index Is Controversial

    Find out why economists are torn about how to calculate inflation.
  4. Economics

    The Truth about Productivity

    Why has labor market productivity slowed sharply around the world in recent years? One of the greatest economic mysteries out there.
  5. Markets

    The (Expected) Market Impact of the 2016 Election

    With primary season upon us, investor attention is beginning to turn to the upcoming U.S. presidential election.
  6. Term

    How Statistical Significance is Determined

    If something is statistically significant, it’s unlikely that it happened by chance.
  7. Economics

    3 Charts All Investors Should See

    Given the abysmal start to the year, the defining question is whether this is another painful but temporary correction, or the start of a bear market.
  8. Investing

    2 Opportunities Amid Today’s Market Volatility

    As you prepare your portfolio for the market volatility ahead this year, here are a few investing ideas to consider.
  9. Mutual Funds & ETFs

    (EWT, FTW, QTWN) 3 Best Taiwan ETFs for 2016

    Examine detailed analysis of three exchange-traded funds that track the Taiwan equity market, and learn about the characteristics and suitability of these ETFs.
  10. Mutual Funds & ETFs

    (ENOR, NORW) 2 Best Norway ETFs for 2016

    Learn about the top two exchange-traded funds, or ETFs, that track the Norway equity market, and explore analyses of their characteristics and suitability.
RELATED FAQS
  1. Do plane tickets get cheaper closer to the date of departure?

    The price of flights usually increases one month prior to the date of departure. Flights are usually cheapest between three ... Read Full Answer >>
  2. Is Colombia an emerging market economy?

    Colombia meets the criteria of an emerging market economy. The South American country has a much lower gross domestic product, ... Read Full Answer >>
  3. What assumptions are made when conducting a t-test?

    The common assumptions made when doing a t-test include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >>
  4. 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 >>
  5. What types of assets lower portfolio variance?

    Assets that have a negative correlation with each other reduce portfolio variance. Variance is one measure of the volatility ... Read Full Answer >>
  6. When is it better to use systematic over simple random sampling?

    Under simple random sampling, a sample of items is chosen randomly from a population, and each item has an equal probability ... Read Full Answer >>
Hot Definitions
  1. Harry Potter Stock Index

    A collection of stocks from companies related to the "Harry Potter" series franchise. Created by StockPickr, this index seeks ...
  2. Liquidation Margin

    Liquidation margin refers to the value of all of the equity positions in a margin account. If an investor or trader holds ...
  3. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  4. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  5. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
Trading Center