Statistical Significance

Definition of 'Statistical Significance'


A result that is not likely to occur randomly, but rather is likely to be attributable to a specific cause. Statistical significance can be strong or weak, and is important to research in many math- and science-related fields, including medicine, sociology, psychology and biology. Statistical significance does not always indicate practical significance. In addition, it can be misinterpreted when researchers do not use language carefully in reporting their results.

Investopedia explains 'Statistical Significance'


The calculation of statistical significance (significance testing) is subject to a certain degree of error. The researcher must define in advance the probability of a sampling error (which exists in any test that does not include the entire population). Sample size is an important component of statistical significance in that larger samples are less prone to flukes. Only random, representative samples should be used in significance testing.

The level at which one can accept whether an event is statistically significant is known as the significance level or p-value.


Filed Under:

comments powered by Disqus
Hot Definitions
  1. Leased Bank Guarantee

    A bank guarantee that is leased to a third party for a specific fee. The issuing bank will conduct due diligence on the creditworthiness of the customer looking to secure a bank guarantee, then lease a guarantee to that customer for a set amount of money and over a set period of time, typically less than two years.
  2. Degree Of Financial Leverage - DFL

    A ratio that measures the sensitivity of a company’s earnings per share (EPS) to fluctuations in its operating income, as a result of changes in its capital structure. Degree of Financial Leverage (DFL) measures the percentage change in EPS for a unit change in earnings before interest and taxes (EBIT).
  3. Jeff Bezos

    Self-made billionaire Jeff Bezos is famous for founding online retail giant Amazon.com.
  4. Re-fracking

    Re-fracking is the practice of returning to older wells that had been fracked in the recent past to capitalize on newer, more effective extraction technology. Re-fracking can be effective on especially tight oil deposits – where the shale products low yields – to extend their productivity.
  5. TIMP (acronym)

    'TIMP' is an acronym that stands for 'Turkey, Indonesia, Mexico and Philippines.' Similar to BRIC (Brazil, Russia, India and China), the acronym was coined by and investor/economist to group fast-growing emerging market economies in similar states of economic development.
  6. Pension Risk Transfer

    When a defined benefit pension provider offloads some or all of the plan’s risk – e.g.: retirement payment liabilities to former employee beneficiaries. The plan sponsor can do this by offering vested plan participants a lump-sum payment to voluntarily leave the plan, or by negotiating with an insurance company to take on the responsibility for paying benefits.
Trading Center