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. Statistics

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

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

    A statistical distribution of random variables which have a normally ...
  5. Heteroskedastic

    A measure in statistics that refers to the variance of errors ...
  6. Random Walk Theory

    The theory that stock price changes have the same distribution ...
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. Professionals

    Why Investors Need to Rebalance Their Portfolios

    The best way to explain why one should rebalance their portfolio is to show what could go wrong if one doesn't.
  7. Fundamental Analysis

    What are the most common issues with Serial Correlation in stocks?

    Read about the concept of serial correlation in stock returns, and learn why market analysts are divided about the efficacy of trading based on stock patterns.
  8. Trading Strategies

    How far back in a stock's history should you go when gauging its volatility?

    Discover why it can be difficult for investors to figure out how far back to go into a stock's history when gauging its volatility.
  9. Personal Finance

    What Exactly Does A Portfolio Analyst Do?

    Portfolio analysts have the exciting role of working between the investment team layers and they touch various aspects of an investment organization.
  10. Trading Strategies

    What are common examples of Serial Correlation in finance?

    Take a deeper look at serial correlation in finance, and find out why most attempts at discovering serial correlation among asset prices have failed.

You May Also Like

Hot Definitions
  1. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  2. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  3. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  4. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  5. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
  6. Bank Guarantee

    A guarantee from a lending institution ensuring that the liabilities of a debtor will be met. In other words, if the debtor ...
Trading Center