DEFINITION of 'Null Hypothesis'
A type of hypothesis used in statistics that proposes that no statistical significance exists in a set of given observations. The null hypothesis attempts to show that no variation exists between variables, or that a single variable is no different than zero. It is presumed to be true until statistical evidence nullifies it for an alternative hypothesis.
INVESTOPEDIA EXPLAINS 'Null Hypothesis'
The null hypothesis assumes that any kind of difference or significance you see in a set of data is due to chance.
For example, Chuck sees that his investment strategy produces higher average returns than simply buying and holding a stock. The null hypothesis claims that there is no difference between the two average returns, and Chuck has to believe this until he proves otherwise. Refuting the null hypothesis would require showing statistical significance, which can be found using a variety of tests. If Chuck conducts one of these tests and proves that the difference between his returns and the buyandhold returns is significant, he can then refute the null hypothesis.
VIDEO

Wilcoxon Test
The Wilcoxon test, which refers to either the Rank Sum test or ... 
OneTailed Test
A statistical test in which the critical area of a distribution ... 
TwoTailed Test
A statistical test in which the critical area of a distribution ... 
Excess Returns
Investment returns from a security or portfolio that exceed a ... 
Alpha
1. A measure of performance on a riskadjusted basis. Alpha takes ... 
Efficient Market Hypothesis  EMH
An investment theory that states it is impossible to "beat the ...

What does a strong null hypothesis mean?
In logic, a null hypothesis refers to a very general assumption that no significant correlation exists between two different ... Read Full Answer >> 
Is finance an art or a science?
The short answer to this question is "both". Finance, as a field of study and an area of business, definitely has strong ... Read Full Answer >> 
What is the difference between the cost of capital and the discount rate?
The cost of capital refers to the actual cost of financing business activity through either debt or equity capital. The discount ... Read Full Answer >> 
How does the market share of a few companies affect the HerfindahlHirschman Index ...
In economics and commercial law, the HerfindahlHirschman Index (HHI) is a widely used measure that indicates the amount ... Read Full Answer >> 
What does the rule of 70 indicate about a country's future economic growth?
The rule of 70 could be used to indicate the approximate number of years that it would take a company's economic growth to ... Read Full Answer >> 
How is the rule of 70 related to the growth rate of a variable?
The rule of 70 is related to the growth rate of a variable because it uses the growth rate in its approximation of the number ... Read Full Answer >>

Fundamental Analysis
What is a Null Hypothesis?
In statistics, a null hypothesis is assumed true until proven otherwise. 
Mutual Funds & ETFs
5 Ways To Measure Mutual Fund Risk
These statistical measurements highlight how to mitigate risk and increase rewards. 
Active Trading Fundamentals
Efficient Market Hypothesis: Is The Stock Market Efficient?
Deciding whether it's possible to attain aboveaverage returns requires an understanding of EMH. 
Options & Futures
Financial Concepts
Diversification? Optimal portfolio theory? Read this tutorial and these and other financial concepts will be made clear. 
Fundamental Analysis
Calculating Future Value
Future value is the value of an asset or cash at a specified date in the future that is equivalent in value to a specified sum today. 
Economics
What is Deadweight Loss?
Mainly used in economics, deadweight loss can be applied to any deficiency caused by an inefficient allocation of resources. 
Investing
The Strong Dollar’s (Real) Toll On Tech Stocks
A large portion of U.S. technology companies’ sales occur overseas, given the strong international business and consumer demand from many U.S. tech firms. 
Fundamental Analysis
How to Calculate a Coverage Ratio
In broad terms, the higher the coverage ratio, the better the ability of the enterprise to fulfill its obligations to its lenders. 
Economics
How to Do a CostBenefit Analysis
The benefits of a given situation or businessrelated action are summed and then the costs associated with taking that action are subtracted. 
Fundamental Analysis
Calculating the HerfindahlHirschman Index (HHI)
The HerfindhalHirschman Index, (HHI) is a measure of market concentration and competition among market participants.