DEFINITION of 'Normal Distribution'
A probability distribution that plots all of its values in a symmetrical fashion and most of the results are situated around the probability's mean. Values are equally likely to plot either above or below the mean. Grouping takes place at values that are close to the mean and then tails off symmetrically away from the mean.
Also known as a "Gaussian distribution" or "bell curve".
BREAKING DOWN 'Normal Distribution'
The normal distribution is the most common type of distribution, and is often found in stock market analysis. Given enough observations within a sample size, it is reasonable to make the assumption that returns follow a normally distributed pattern, but this assumption can be disproved.
As with any distribution, the distributions mean, skewness and kurtosis coefficients should be calculated in order to determine the type of distribution you may be dealing with.

Leptokurtic
A statistical distribution where the points along the Xaxis ... 
Platykurtic
A type of statistical distribution where the points along the ... 
Kurtosis
A statistical measure used to describe the distribution of observed ... 
Mean
The simple mathematical average of a set of two or more numbers. ... 
Covariance
A measure of the degree to which returns on two risky assets ... 
Skewness
Describe asymmetry from the normal distribution in a set of statistical ...

Options & Futures
An Introduction To Value at Risk (VAR)
Volatility is not the only way to measure risk. Learn about the "new science of risk management". 
Markets
The Uses And Limits Of Volatility
Check out how the assumptions of theoretical risk models compare to actual market performance. 
Forex Education
Trading With Gaussian Models Of Statistics
The entire study of statistics originated from Gauss and allowed us to understand markets, prices and probabilities, among other applications. 
Active Trading Fundamentals
How To Convert Value At Risk To Different Time Periods
Volatility is not the only way to measure risk. Learn about the "new science of risk management". 
Fundamental Analysis
A DisasterProtection Plan For Your Portfolio
If you can't predict the future, you'll need to plan ahead to protect your assets from the impact of major world events. 
Fundamental Analysis
Monte Carlo Simulation With GBM
Learn to predict future events through a series of random trials. 
Mutual Funds & ETFs
Stock Market Risk: Wagging The Tails
The bell curve is an excellent way to evaluate stock market risk over the long term. 
Investing
Where the Price is Right for Dividends
There are two broad schools of thought for equity income investing: The first pays the highest dividend yields and the second focuses on healthy yields. 
Personal Finance
How Tech Can Help with 3 Behavioral Finance Biases
Even if you’re a finance or statistics expert, you’re not immune to common decisionmaking mistakes that can negatively impact your finances. 
Investing Basics
5 Tips For Diversifying Your Portfolio
A diversified portfolio will protect you in a tough market. Get some solid tips here!

What is RiskMetrics in Value at Risk (VaR)?
RiskMetrics is a methodology that contains techniques and data sets used to calculate the value at risk (VaR) of a portfolio ... Read Full Answer >> 
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 >> 
What assumptions are made when conducting a ttest?
The common assumptions made when doing a ttest include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >> 
What is the utility function and how is it calculated?
In economics, utility function is an important concept that measures preferences over a set of goods and services. Utility ... Read Full Answer >> 
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 >> 
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 >>