DEFINITION of 'TwoTailed Test'
A statistical test in which the critical area of a distribution is two sided and tests whether a sample is either greater than or less than a certain range of values. If the sample that is being tested falls into either of the critical areas, the alternative hypothesis will be accepted instead of the null hypothesis. The twotailed test gets its name from testing the area under both of the tails (sides) of a normal distribution, although the test can be used in other nonnormal distributions.
INVESTOPEDIA EXPLAINS 'TwoTailed Test'
An example of when one would want to use a twotailed test is at a candy production/packaging plant. Let's say the candy plant wants to make sure that the number of candies per bag is around 50. The factory is willing to accept between 45 and 55 candies per bag. It would be too costly to have someone check every bag, so the factory selects random samples of the bags, and tests whether the average number of candies exceeds 55 or is less than 45 with whatever level of significance it chooses.

OneTailed Test
A statistical test in which the critical area of a distribution ... 
Standard Deviation
1. A measure of the dispersion of a set of data from its mean. ... 
Type I Error
A type of error that occurs when a null hypothesis is rejected ... 
Null Hypothesis
A type of hypothesis used in statistics that proposes that no ... 
Hypothesis Testing
A process by which an analyst tests a statistical hypothesis. ... 
Type II Error
A statistical term used within the context of hypothesis testing ...

What is the difference between a simple random sample and a stratified random sample?
Simple random samples and stratified random samples differ in how the sample is drawn from the overall population of data. ... Read Full Answer >> 
What are the advantages and disadvantages of using systematic sampling?
As a statistical sampling method, systematic sampling is simpler and more straightforward than random sampling. It can also ... Read Full Answer >> 
What is the difference between the standard error of means and standard deviation?
The standard deviation, or SD, measures the amount of variability or dispersion for a subject set of data from the mean, ... Read Full Answer >> 
What level of correlation among investments will guarantee market returns but have ...
The efficient frontier set forth by modern portfolio theory (MPT) can provide an estimate of an optimal portfolio that allows ... Read Full Answer >> 
What is a "non linear" exposure in Value at Risk (VaR)?
The value at risk (VaR) is a statistical risk management technique that determines the amount of financial risk associated ... Read Full Answer >> 
What are some examples of positive correlation in economics?
Positive correlation exists when two variables move in the same direction. A basic example of positive correlation is height ... Read Full Answer >>

Economics
What is Systematic Sampling?
Systematic sampling is similar to random sampling, but it uses a pattern for the selection of the sample. 
Fundamental Analysis
Explaining Expected Return
The expected return is a tool used to determine whether or not an investment has a positive or negative average net outcome. 
Fundamental Analysis
Explaining the Geometric Mean
The average of a set of products, the calculation of which is commonly used to determine the performance results of an investment or portfolio. 
Investing
The Labor Market Recovery’s Missing Ingredient
Job creation is running at the fastest pace since the 90s, and there is some evidence that wage growth is finally starting to accelerate, albeit modestly. 
Trading Strategies
Best Undergraduate Degrees For Day Traders
We look at some popular undergrad majors for those wanting to begin a career in the exciting world of fastpaced trading. 
Fundamental Analysis
Explaining Standard Error
Standard error is a statistical term that measures the accuracy with which a sample represents a population. 
Economics
Understanding Economic Order Quantity
Economic order quantity is an inventoryrelated equation that determines the optimum order quantity that a company should hold in its inventory. 
Fundamental Analysis
What is a Null Hypothesis?
In statistics, a null hypothesis is assumed true until proven otherwise. 
Investing
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 subgroup’s ... 
Fundamental Analysis
Lognormal and Normal Distribution
When and why do you use lognormal distribution or normal distribution for analyzing securities? Lognormal for stocks, normal for portfolio returns.