What is a 'Null Hypothesis'
A null hypothesis is a type of hypothesis used in statistics that proposes that no statistical significance exists in a set of given observations. The null hypothesis attempts to show that no variation exists between variables or that a single variable is no different than its mean. It is presumed to be true until statistical evidence nullifies it for an alternative hypothesis.
BREAKING DOWN 'Null Hypothesis'
The null hypothesis, also known as the conjecture, assumes that any kind of difference or significance you see in a set of data is due to chance. The opposite of the null hypothesis is known as the alternative hypothesis.
Null Hypothesis Versus Alternative Hypothesis
The null hypothesis is the initial statistical claim that the population mean is equivalent to the claimed. For example, assume the average time to cook a specific brand of pasta is 12 minutes. Therefore, the null hypothesis would be stated as, "The population mean is equal to 12 minutes." Conversely, the alternative hypothesis is the hypothesis that is accepted if the null hypothesis is rejected.
For example, assume the hypothesis test is set up so that the alternative hypothesis states that the population parameter is not equal to the claimed value. Therefore, the cook time for the population mean is not equal to 12 minutes; rather, it could be less than or greater than the stated value. If the null hypothesis is accepted or the statistical test indicates that the population mean is 12 minutes, then the alternative hypothesis is rejected. And vice versa.
Hypothesis Testing for Investments
For example, Alice sees that her investment strategy produces higher average returns than simply buying and holding a stock. The null hypothesis claims that there is no difference between the two average returns, and Alice has to believe this until she proves otherwise. Refuting the null hypothesis would require showing statistical significance, which can be found using a variety of tests. Therefore, the alternative hypothesis would state that the investment strategy has a higher average return than a traditional buyandhold strategy.
The pvalue is used to determine the statistical significance of the results. A pvalue that is less than or equal to 0.05 is usually used to indicate whether there is strong evidence against the null hypothesis. If Alice conducts one of these tests, such as a test using the normal model, and proves that the difference between her returns and the buyandhold returns is significant, or the pvalue is less than or equal to 0.05, she can then refute the null hypothesis and accept the alternative hypothesis.

PValue
The level of marginal significance within a statistical hypothesis ... 
Type II Error
A type II error is a statistical term used within the context ... 
Alpha Risk
Alpha risk is the risk in a statistical test of rejecting a null ... 
OneTailed Test
A onetailed test is a statistical test in which the critical ... 
LifeCycle Hypothesis (LCH)
The LifeCycle Hypothesis (LCH) is an economic theory that pertains ... 
Statistically Significant
Statistically significant is likelihood that a result or relationship ...

Investing
Efficient Market Hypothesis: Is The Stock Market Efficient?
Deciding whether it's possible to attain aboveaverage returns requires an understanding of EMH. 
Insights
Investopedia Explains Fractal Markets Theory
Fractal Market Hypothesis has emerged as an alternative to longstanding economic theories due to its ability to explain investor behavior during crises. 
Investing
Diversification Strategies: Stocks Vs. Gold
When it comes to asset allocation, is gold a solid diversifying asset class? 
Investing
Does Weather Affect the Stock Market?
Find out if the weather can change the stock market, and why economists and meteorologists will probably always struggle to know the answer. 
Investing
The Evolution of ETFs
Key 20thcentury financial theories changed the way investors viewed markets and created the circumstances in which ETFs could emerge. 
Insights
Twin Deficits: Twice the Fun for the U.S
Learn more about what it means for U.S. to run both fiscal and current account deficits. 
Investing
An Introduction To Behavioral Finance
Curious about how emotions and biases affect the market? Find some useful insight here.

What are the differences between weak, strong and semistrong versions of the Efficient ...
Discover how the efficient market theory is broken down into three versions, the hallmarks of each and the anomalies that ... Read Answer >> 
Can the Efficient Market Hypothesis explain economic bubbles?
Learn about the nuanced relationship between the efficient market hypothesis and economic bubbles and the requirements and ... Read Answer >> 
What happens to a stop order after a stock splits?
A stop order (or stoploss order) is executed when a security reaches a predetermined price as a market order. Learn what ... Read Answer >>