Random Variable

AAA

DEFINITION of 'Random Variable'

A variable whose value is unknown or a function that assigns values to each of an experiment's outcomes. Random variables are often designated by letters and can be classified as discrete, which are variables that have specific values, or continuous, which are variables that can have any values within a continuous range.

INVESTOPEDIA EXPLAINS 'Random Variable'

Consider an experiment where a coin is tossed three times. If X represents the number of times that the coin comes up heads, then X is a discrete random variable that can only have the values 0,1,2,3 (from no heads in three successive coin tosses, to all heads). No other value is possible for X.


An example of a continuous random variable would be an experiment that involves measuring the amount of rainfall in a city over a year, or the average height of a random group of 25 people.




RELATED TERMS
  1. Discrete Distribution

    The statistical or probabilistic properties of observable (either ...
  2. Nonparametric Statistics

    A statistical method wherein the data is not required to fit ...
  3. Probability Distribution

    A statistical function that describes all the possible values ...
  4. Normal Distribution

    A probability distribution that plots all of its values in a ...
  5. Scenario Analysis

    The process of estimating the expected value of a portfolio after ...
  6. Absolute Percentage Growth

    An increase in the value of an asset or account expressed in ...
Related Articles
  1. What Are The Odds Of Scoring A Winning ...
    Investing Basics

    What Are The Odds Of Scoring A Winning ...

  2. Financial Markets: Random, Cyclical ...
    Fundamental Analysis

    Financial Markets: Random, Cyclical ...

  3. Trading With Gaussian Models Of Statistics
    Forex Education

    Trading With Gaussian Models Of Statistics

  4. What Your Trading Charts Aren't Telling ...
    Trading Strategies

    What Your Trading Charts Aren't Telling ...

comments powered by Disqus
Hot Definitions
  1. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  2. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  3. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  4. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  5. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
  6. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
Trading Center