What is a 'TTest'
A ttest is an analysis of two populations means through the use of statistical examination; a ttest with two samples is commonly used with small sample sizes, testing the difference between the samples when the variances of two normal distributions are not known.
A ttest looks at the tstatistic, the tdistribution and degrees of freedom to determine the probability of difference between populations; the test statistic in the test is known as the tstatistic. To conduct a test with three or more variables, an analysis of variance (ANOVA) must be used.
BREAKING DOWN 'TTest'
A form of hypothesis testing, the ttest is just one of many tests used for this purpose. Statisticians must use tests other than the ttest to examine more variables, as well as for test with larger sample sizes. For a large sample size, statisticians use a ztest. Other testing options include the chisquare test and the ftest.Statistical Analysis of the TTest
The formula used to calculate the test is a ratio: The top portion of the ratio is the easiest portion to calculate and understand, as it is simply the difference between the means or averages of the two samples. The lower half of the ratio is a measurement of the dispersion, or variability, of the scores. The bottom part of this ratio is known as the standard error of the difference. To compute this part of the ratio, the variance for each sample is determined and is then divided by the number of individuals the compose the sample, or group. These two values are then added together, and a square root is taken of the result.
Example
For example, consider that an analyst wants to study the amount that Pennsylvanians and Californians spend, per month, on clothing. It would not be practical to record the spending habits of every individual (or family) in both states, thus a sample of spending habits is taken from a selected group of individuals from each state. The group may be of any small to moderate size â€” for this example, assume that the sample group is 200 individuals.
The average amount for Pennsylvanians comes out to $500; the average amount for Californians is $1,000. The ttest questions whether the different between the groups is representative of a true difference between people in Pennsylvania and people in California in general or if it is likely a meaningless statistical difference. In this example, if, theoretically, all Pennsylvanians spent $500 per month on clothing and all Californians spent $1,000 per month on clothing, it is highly unlikely that 200 randomly selected individuals all spent that exact amount, respective to state. Thus, if an analyst or statistician yielded the results listed in the example above, it is safe to conclude that the difference between sample groups is indicative of a significant difference between the populations, as a whole, of each state.

ZTest
A statistical test used to determine whether two population means ... 
Sample
A subset containing the characteristics of a larger population. ... 
Sampling
A process used in statistical analysis in which a predetermined ... 
Central Limit Theorem  CLT
A statistical theory that states that given a sufficiently large ... 
Sampling Error
A statistical error to which an analyst exposes a model simply ... 
Systematic Sampling
A type of probability sampling method in which sample members ...

Trading
What's a TTest?
TTest is a term from statistics that allows for the comparison of two data populations and their means. The test is used to see if the two sets of data are significantly different from one another. ... 
Markets
How Does Sampling Work?
Sampling is a term used in statistics that describes methods of selecting a predefined representative number of data from a larger data population. 
Investing
Explaining Standard Error
Standard error is a statistical term that measures the accuracy with which a sample represents a population. 
Markets
What is Systematic Sampling?
Systematic sampling is similar to random sampling, but it uses a pattern for the selection of the sample. 
Markets
What is a Representative Sample?
In statistics, a representative sample accurately represents the makeup of various subgroups in an entire data pool. 
Markets
Understanding the Simple Random Sample
A simple random sample is a subset of a statistical population in which each member of the subset has an equal probability of being chosen. 
Markets
Explaining the Central Limit Theorem
Central limit theorem is a fundamental concept in probability theory. 
Markets
How to Use Stratified Random Sampling
Stratified random sampling is a technique best used with a sample population easily broken into distinct subgroups. Samples are then taken from each subgroup based on the ratio of the subgroupâ€™s ... 
Trading
Hypothesis Testing in Finance: Concept & Examples
When you're indecisive about an investment, the best way to keep a cool head might be test various hypotheses using the most relevant statistics. 
Retirement
Birch Box Review: Is It Worth It?
Learn more about the convenience of the subscription beauty box industry, and discover why the Birchbox company in particular has become so popular.

What assumptions are made when conducting a ttest?
Learn what a ttest is, and discover the five standard assumptions that are made regarding the validity of sampling and data ... Read Answer >> 
How can a representative sample lead to sampling bias?
Learn how using representative samples alone is not enough to make sampling bias negligible and why elements such as randomization ... Read Answer >> 
What's the difference between a representative sample and a convenience sample?
Learn the difference between convenience sampling and representative sampling and the advantages and disadvantages of each ... Read Answer >> 
What percentage of the population do you need in a representative sample?
Learn about representative samples and how they are used in conjunction with other strategies to create useful data with ... Read Answer >> 
What are some common financial sampling methods?
Read about the differences between various common financial sampling methods for financial analysts, statisticians, marketers ... Read Answer >> 
What is the difference between systematic sampling and cluster sampling?
Learn about the differences between systematic sampling and cluster sampling, including how the samples are created for each ... Read Answer >>