DEFINITION of 'Permutation'
In mathematics, one of several ways of arranging or picking a set of items. The number of permutations possible for arranging a given a set of n numbers is equal to n factorial (n!). So, a set of three numbers can be arranged as: 3x2x1 = 6 permutations. Another type of permutation involves choosing a set of i items out of n choices. In this case, the number of permutations for choosing i items given n choices is given by n!/[(ni)!]. Permutations are applicable to sets where the order matters; order does not matter in combinations.
INVESTOPEDIA EXPLAINS 'Permutation'
The study of permutations applies to finance in a broad sense because a good understanding of probability is sometimes necessary to make rational financial choices. The Allais paradox problem shows that on their own, people do not instinctually choose the higher expected financial reward. Given the choice between a sure amount of money and a small gamble with a higher expected value, most people choose the guaranteed amount due to behavioral biases. Financial professionals must be able to rationally evaluate such situations and make the correct choices on behalf of shareholders or clients.

Daniel Kahneman
A professor emeritus of psychology and public affairs at Princeton ... 
Maurice Allais
A French economist who won the 1988 Nobel Prize in Economics ... 
Prospect Theory
A theory that people value gains and losses differently and, ... 
Behavioral Economics
The study of psychology as it relates to the economic decision ... 
Expected Return
The amount one would anticipate receiving on an investment that ... 
Probability Distribution
A statistical function that describes all the possible values ...

Investing Basics
What Are The Odds Of Scoring A Winning Trade?
Just because you're on a winning streak doesn't mean you're a skilled trader. Find out why. 
Fundamental Analysis
Find The Right Fit With Probability Distributions
Discover a few of the most popular probability distributions and how to calculate them. 
Markets
Get A Richer Picture With The PenmanNissim Framework
Probability trends and profitability analysis are clearer when using this framework. 
Active Trading Fundamentals
Bet Smarter With The Monte Carlo Simulation
This technique can reduce uncertainty in estimating future outcomes. 
Forex Education
Financial Forecasting: The Bayesian Method
This method can help refine probability estimates using an intuitive process. 
Fundamental Analysis
Scenario Analysis Provides Glimpse Of Portfolio Potential
This statistical method estimates how far a stock might fall in a worstcase scenario. 
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 ... 
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. 
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. 
Technical Indicators
The Normal Distribution Table, Explained
The normal distribution formula is based on two simple parameters  mean and standard deviation