Nonparametric Statistics

AAA

DEFINITION of 'Nonparametric Statistics'

A statistical method wherein the data is not required to fit a normal distribution. Nonparametric statistics uses data that is often ordinal, meaning it does not rely on numbers, but rather a ranking or order of sorts. For example, a survey conveying consumer preferences ranging from like to dislike would be considered ordinal data.

INVESTOPEDIA EXPLAINS 'Nonparametric Statistics'

Nonparametric statistics have gained appreciation due to their ease of use. As the need for parameters is relieved, the data becomes more applicable to a larger variety of tests. This type of statistics can be used without the mean, sample size, standard deviation, or the estimation of any other related parameters when none of that information is available.

RELATED TERMS
  1. Chi Square Statistic

    A measurement of how expectations compare to results. The data ...
  2. Statistical Significance

    A result that is not likely to occur randomly, but rather is ...
  3. Nonparametric Method

    A method commonly used in statistics to model and analyze ordinal ...
  4. Normal Distribution

    A probability distribution that plots all of its values in a ...
  5. Standard Deviation

    1. A measure of the dispersion of a set of data from its mean. ...
  6. Mean

    The simple mathematical average of a set of two or more numbers. ...
Related Articles
  1. Home & Auto

    Insure Your Future With A Career As An Actuary

    If you've got excellent math skills, they can add up to a lucrative career as an actuary.
  2. Investing Basics

    Economic Indicators That Do-It-Yourself Investors Should Know

    Understanding these investing tools will put the market in your hands.
  3. Options & Futures

    Options Trading Volume And Open Interest

    Learn how these two statistics can give you an edge in trading options.
  4. Investing

    How to Use Stratified Random Sampling

    Stratified random sampling is a technique best used with a sample population easily broken into distinct subgroups. Samples are then taken from each subgroup based on the ratio of the subgroup’s ...
  5. Fundamental Analysis

    Lognormal and Normal Distribution

    When and why do you use lognormal distribution or normal distribution for analyzing securities? Lognormal for stocks, normal for portfolio returns.
  6. Investing Basics

    Using Normal Distribution Formula To Optimize Your Portfolio

    Normal or bell curve distribution can be used in portfolio theory to help portfolio managers maximize return and minimize risk.
  7. Technical Indicators

    The Normal Distribution Table, Explained

    The normal distribution formula is based on two simple parameters - mean and standard deviation
  8. Economics

    Can Investors Trust Official Statistics?

    The official statistics in some countries need to be taken with a grain of salt. Find out why you should be skeptical.
  9. Investing Basics

    R-Squared

    Learn more about this statistical measurement used to represent movement between a security and its benchmark.
  10. Active Trading Fundamentals

    Hypothesis Testing in Finance: Concept & Examples

    When you're indecisive about an investment, the best way to keep a cool head might be test various hypotheses using the most relevant statistics.

You May Also Like

Hot Definitions
  1. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  2. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  3. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  4. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  5. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  6. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
Trading Center