What is a 'Probability Distribution'
A probability distribution is a statistical function that describes all the possible values and likelihoods that a random variable can take within a given range. This range will be between the minimum and maximum statistically possible values, but where the possible value is likely to be plotted on the probability distribution depends on a number of factors, including the distributions mean, standard deviation, skewness and kurtosis.
BREAKING DOWN 'Probability Distribution'
Academics and fund managers alike may determine a particular stock's probability distribution to determine the possible returns that the stock may yield in the future. The stock's history of returns, which can be measured on any time interval, will likely be comprised of only a fraction of the stock's returns, which will subject the analysis to sampling error. By increasing the sample size, this error can be dramatically reduced.
There are many different classifications of probability distributions, including the chi square, and normal and binomial distributions.

Normal Distribution
A probability distribution that plots all of its values in a ... 
Mesokurtic
A term used in a statistical context where the kurtosis of a ... 
Kurtosis
A statistical measure used to describe the distribution of observed ... 
Excess Kurtosis
A statistical term describing that a probability, or return distribution, ... 
Uniform Distribution
In statistics, a type of probability distribution in which all ... 
Sampling Distribution
A probability distribution of a statistic obtained through a ...

Investing
Find The Right Fit With Probability Distributions
Discover a few of the most popular probability distributions and how to calculate them. 
Investing
What a Normal Distribution Means
Normal distribution describes a symmetrical data distribution, where most of the results lie near the mean. 
Trading
Trading With Gaussian Models Of Statistics
The entire study of statistics originated from Gauss and allowed us to understand markets, prices and probabilities, among other applications. 
Investing
Scenario Analysis Provides Glimpse Of Portfolio Potential
This statistical method estimates how far a stock might fall in a worstcase scenario. 
Trading
Bet Smarter With The Monte Carlo Simulation
This technique can reduce uncertainty in estimating future outcomes. 
Managing Wealth
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. 
Investing
Explaining Standard Error
Standard error is a statistical term that measures the accuracy with which a sample represents a population. 
Investing
Quantitative Analysis Of Hedge Funds
Hedge fund analysis requires more than just the metrics used to analyze mutual funds. 
Trading
Understanding Statistics
Statistics provide the means to analyze data and then summarize it into a numerical form. 
Trading
Basics Of The Binomial Distribution
Despite the fancysounding name, you already understand the Binomial Distribution, and you can use it to make money. Ready? Read on.

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