Poisson Distribution

AAA

DEFINITION of 'Poisson Distribution'

A statistical distribution showing the frequency probability of specific events when the average probability of a single occurrence is known. The Poisson distribution is a discrete function.

INVESTOPEDIA EXPLAINS 'Poisson Distribution'

For example, if the average number of people that rent movies on a friday night at a single video store location is 400, a Poisson distribution can answer such questions as, "What is the probability that more than 600 people will rent movies?" Therefore, application of the Poisson distribution enables managers to introduce optimal scheduling systems. One of the most famous historical practical uses of the Poisson distribution was estimating the annual number of Prussian cavalry soldiers killed due to horse-kicks. Other modern examples include estimating the number of car crashes in a city of a given size; in physiology, this distribution is often used to calculate the probabilistic frequencies of different types of neurotransmitter secretions.

RELATED TERMS
  1. Discrete Distribution

    The statistical or probabilistic properties of observable (either ...
  2. Random Walk Theory

    The theory that stock price changes have the same distribution ...
  3. Heteroskedastic

    A measure in statistics that refers to the variance of errors ...
  4. Statistics

    A type of mathematical analysis involving the use of quantified ...
  5. Frequency Distribution

    A representation, either in a graphical or tabular format, which ...
  6. Log-Normal Distribution

    A statistical distribution of random variables which have a normally ...
Related Articles
  1. Budgeting

    8 Tips To Help You Control Holiday Spending

    These tips will have you singing "Joy to the World" well into the New Year.
  2. The debate between those who believe in an efficient market and those who believe that the markets follow a somewhat cyclical path will likely continue for the foreseeable future.
    Fundamental Analysis

    Financial Markets: Random, Cyclical Or Both?

    Are the markets random or cyclical? It depends on who you ask. Here, we go over both sides of the argument.
  3. Entrepreneurship

    Female CEOs Who Climbed The Corporate Ladder

    These women climbed the ladder and broke the glass ceiling.
  4. Professionals

    Traditional MBA Or Business Graduate Degree?

    Though an MBA is the most popular business graduate degree, there may be other options more suited to your goals.
  5. Economics

    How Does The Economy Affect House Size?

    The better the economy, the bigger the house. But beware - everything that glitters isn't gold.
  6. Investing Basics

    Online Portfolio Management, DIY or Fee-Based Financial Advisor: Which Is Right For You?

    Should you use an online financial planning service, or do professional, fee-based financial planners justify their higher costs?
  7. Chart Advisor

    A Total Stock Market ETF For Any Portfolio

    Utilizing index funds and ETFs, such as Vanguard's VTI, is one of the best ways for the average investor to track the broad markets and minimize fees.
  8. A Monte Carlo simulation allows analysts and advisors to convert investment chances into choices. The advantage of Monte Carlo is its ability to factor in a range of values for various inputs.
    Fundamental Analysis

    What Can The Monte Carlo Simulation Do For Your Portfolio?

    A Monte Carlo simulation allows analysts and advisors to convert investment chances into choices. The advantage of Monte Carlo is its ability to factor in a range of values for various inputs.
  9. Fundamental Analysis

    How do I judge a mutual fund's performance?

    Evaluate mutual fund performance utilizing resources such as Morningstar; compare the fund with others in its peer group to find the best mutual fund for you.
  10. Strategic asset allocation is a portfolio strategy that involves setting target allocations.
    Bonds & Fixed Income

    Strategic Asset Allocation

    Strategic asset allocation is a portfolio strategy that involves setting target allocations for various asset classes, then periodically rebalancing the portfolio back to the original allocations ...

You May Also Like

Hot Definitions
  1. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  2. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  3. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  4. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  5. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  6. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
Trading Center