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. Frequency Distribution

    A representation, either in a graphical or tabular format, which ...
  3. Statistics

    A type of mathematical analysis involving the use of quantified ...
  4. Heteroskedastic

    A measure in statistics that refers to the variance of errors ...
  5. Log-Normal Distribution

    A statistical distribution of random variables which have a normally ...
  6. Random Walk Theory

    The theory that stock price changes have the same distribution ...
RELATED FAQS
  1. What is the difference between passive and active asset management?

    Asset management utilizes two main investment strategies that can be used to generate returns: active asset management and ... Read Full Answer >>
  2. What percentage of a diversified portfolio should large cap stocks comprise?

    The percentage of a diversified investment portfolio that should consist of large-cap stocks depends on an individual investor's ... Read Full Answer >>
  3. 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 >>
  4. What types of assets produce negative portfolio variance?

    Assets that have a negative correlation with each other produce negative portfolio variance. Variance is one measure of the ... Read Full Answer >>
  5. Why should an investor include an allocation to the telecommunications sector in ...

    An investor should include an allocation to the telecommunications sector in his portfolio, because telecom offers an investor ... Read Full Answer >>
  6. What are some mutual funds that do not have 12b-1 fees?

    Some of the most popular and best-performing mutual funds that do not include any 12b-1 fees in the expenses charged to fund ... Read Full Answer >>
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. 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. Mutual Funds & ETFs

    Top 3 ETFS for Investing in Germany

    Discover why Germany is considered an economic powerhouse in the eurozone, and learn about the three ETFs that provide investors exposure to Germany’s economy.
  7. Economics

    Explaining the Liquidity Coverage Ratio

    The liquidity coverage ratio requires banks and other financial institutions to hold enough cash and liquid assets on hand to weather market stress.
  8. Fundamental Analysis

    Calculating Valuation

    Valuation is the process of determining what an asset is worth.
  9. Mutual Funds & ETFs

    Top 3 ETFs For Investing in Brazil

    Discover information and analysis of some of the most popular and best performing exchange-traded funds that offer investors exposure to Brazil.
  10. Investing

    Successful Investors Don’t Just Set It & Forget It

    The most highly effective investors consistently take steps to adapt their investment plan in the face of changing markets and changing lives.

You May Also Like

Hot Definitions
  1. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  2. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  3. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  4. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
  5. Sin Tax

    A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. ...
  6. Grandfathered Activities

    Nonbank activities, some of which would normally not be permissible for bank holding companies and foreign banks in the United ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!