What is 'Balanced ANOVA'

Balanced ANOVA is a statistical test used to determine whether or not different groups have different means. Analysis of variance testing (ANOVA) is used to test the differences between means for statistical significance. An ANOVA analysis is typically applied to a set of data in which sample sizes are kept equal for each treatment combination. Balanced ANOVA tests are often done with computer software due to the complexity of mathematical calculations. It does not work well in experiments in which observations are missing or extra observations are present.

BREAKING DOWN 'Balanced ANOVA'

A one-way ANOVA test checks for significance for one factor only, while a two-way ANOVA test analyzes the effects of two factors simultaneously. Two-way ANOVA tests are the most useful when the replicate examples are equal, or "balanced."

ANOVA Uses in Finance

ANOVA is used in finance in several different ways, such as to forecast the movements of security prices by first determining which factors influence stock fluctuations. Factor investing focuses on both macroeconomics and investing style, and this quantitative analysis can provide valuable insight into the behavior of a security or market index under various conditions. For example, it could show how much of a security's rise or fall is due to changes in interest rates. A t-test and f-test are used to analyze the results of an analysis of variance test to determine which variables are of statistical significance.

RELATED TERMS
  1. Two-Way ANOVA

    A two-way ANOVA test is a statistical test used to determine ...
  2. Analysis Of Variances - ANOVA

    Analysis of variances (ANOVA) is a statistical examination of ...
  3. T-Test

    A statistical examination of two population means. A two-sample ...
  4. Acceptance Testing

    Acceptance testing, in the engineering and software industries, ...
  5. Cost Test

    A cost test is applied to a process to determine if the net present ...
  6. Test

    A test is when a stock’s price approaches an established support ...
Related Articles
  1. Personal Finance

    Top 20 Countries With the Highest GMAT Scores

    A total of 42 countries had higher average scores than the U.S. in the last testing year.
  2. Investing

    A Slowdown is Hitting Quest Diagnostics (DGX)

    Quest Diagnostics holds an interesting position in the healthcare value market, but the company faces a few challenges.
  3. Personal Finance

    2 Ways To Finish Undergraduate And MBA Programs Faster

    Testing out of courses and challenging course credit decisions can allow you to save money and time at college.
  4. Investing

    EU Bank Stress Test Results: A Preview

    The tests of 51 banks covering 70% of total banking assets across the EU come at a time of great turmoil in banking when many financial shares have plunged
  5. Retirement

    Applying for Social Security Before Retirement Age

    Planning to receive Social Security before full retirement age? Take the earnings test first.
  6. 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 ...
  7. Personal Finance

    Studying For The CFP Exam

    Learn the tips and tricks of the trade before heading into this test.
  8. Trading

    Beginner Trading Fundamentals

    ...
  9. Investing

    What's a Trial Balance?

    A trial balance is a worksheet listing the debit or credit balances of all the ledger accounts for an entity. Under accounting theory, the total of all the debits must equal the total of all ...
RELATED FAQS
  1. Do financial advisors get drug tested?

    Learn how financial advisor regulatory bodies do not require drug testing but many individual firms that hire advisors do ... Read Answer >>
  2. What's the difference between a representative sample and a random sample?

    Explore the differences between representative samples and random samples, and discover how they are often used in tandem ... Read Answer >>
  3. 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 >>
  4. How do I calculate the standard error using Matlab?

    Learn how to calculate the standard error for a sample statistical measure, such as the sample mean, using standard Matlab ... Read Answer >>
  5. Does the balance sheet always balance?

    Yes, a balance sheet should always balance. The name "balance sheet" is based on the fact that total assets will equal the ... Read Answer >>
Hot Definitions
  1. Discount Rate

    Discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from ...
  2. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  3. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  4. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  5. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
  6. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
Trading Center