DEFINITION of 'Two-Way ANOVA'
A statistical test used to determine the effect of two nominal predictor variables on a continuous outcome variable. A two-way ANOVA test analyzes the effect of the independent variables on the expected outcome along with their relationship to the outcome itself. Random factors would be considered to have no statistical influence on a data set, while systematic factors would be considered to have statistical significance.
BREAKING DOWN 'Two-Way ANOVA'
An ANOVA test is the first step in identifying factors that influence a given outcome. Once an ANOVA test is performed, a tester may be able to perform further analysis on the systematic factors that are statistically contributing to the data set's variability. ANOVA test results can then be used in an F-test on the significance of the regression formula overall.