## What is 'Statistics'

Statistics is a form of mathematical analysis that uses quantified models, representations and synopses for a given set of experimental data or real-life studies. Statistics studies methodologies to gather, review, analyze and draw conclusions from data. Some statistical measures include mean, regression analysis, skewness, kurtosis, variance and analysis of variance.

Next Up

## BREAKING DOWN 'Statistics'

Statistics is a term used to summarize a process that an analyst uses to characterize a data set. If the data set depends on a sample of a larger population, then the analyst can develop interpretations about the population primarily based on the statistical outcomes from the sample. Statistical analysis involves the process of gathering and evaluating data and then summarizing the data into a mathematical form.

Statistical methods analyze large volumes of data and their properties. Statistics is used in various disciplines such as psychology, business, physical and social sciences, humanities, government and manufacturing. Statistical data is gathered using a sample procedure or other method. Two types of statistical methods are used in analyzing data: descriptive statistics and inferential statistics. Descriptive statistics are used to synopsize data from a sample exercising the mean or standard deviation. Inferential statistics are used when data is viewed as a subclass of a specific population.

## Mean

A mean is the mathematical average of a group of two or more numerals. The mean for a specified set of numbers can be computed in multiple ways, including the arithmetic mean, which shows how well a specific commodity performs over time, and the geometric mean, which shows the performance results of an investor’s portfolio invested in that same commodity over the same period.

## Regression Analysis

Regression analysis determines the extent to which specific factors such as interest rates, the price of a product or service, or particular industries or sectors influence the price fluctuations of an asset. This is depicted in the form of a straight line called linear regression.

## Skewness

Skewness describes the degree a set of data varies from the standard distribution in a set of statistical data. Most data sets, including commodity returns and stock prices, have either positive skew, a curve skewed toward the left of the data average, or negative skew, a curve skewed toward the right of the data average.

## Kurtosis

Kurtosis measures whether the data are light-tailed (less outlier-prone) or heavy-tailed (more outlier-prone) than the normal distribution. Data sets with high kurtosis have heavy tails, or outliers, which implies greater investment risk in the form of occasional wild returns. Data sets with low kurtosis have light tails, or lack of outliers, which implies lesser investment risk.

## Variance

Variance is a measurement of the span of numbers in a data set. The variance measures the distance each number in the set is from the mean. Variance can help determine the risk an investor might accept when buying an investment.

## Analysis of Variance

Ronald Fisher developed the analysis of variance method. It is used to decide the effect solitary variables have on a variable that is dependent. It may be used to compare the performance of different stocks over time.

RELATED TERMS
1. ### Variance

Variance is the spread between numbers in a data set and their ...
2. ### Descriptive Statistics

Descriptive statistics is a set of brief descriptive coefficients ...
3. ### Normal Distribution

A probability distribution that plots all of its values in a ...
4. ### Variability

The extent to which data points in a statistical distribution ...
5. ### Excess Kurtosis

Excess kurtosis describes a probability distribution with fat ...
6. ### Portfolio Variance

Portfolio variance is the measurement of how the actual returns ...
Related Articles

### Trading with Gaussian models of statistics

The study of statistics originated from Carl Friedrich Gauss and helps us understand markets, prices and probabilities, among other applications.
2. Investing

### What's Skewness?

Skewness describes how a data distribution leans.
3. Insights

### SKEW Index Suggests a Market Downturn is Possible

The CBOE SKEW Index is at record highs. Does that mean a crash is coming?
4. Investing

### Calculating volatility: A simplified approach

Though most investors use standard deviation to determine volatility, there's an easier and more accurate way of doing it: the historical method.

### Exploring the Exponentially Weighted Moving Average

Learn how to calculate a metric that improves on simple variance.
6. Insights

### Can Investors Trust Official Statistics?

The official statistics in some countries need to be taken with a grain of salt. Find out why you should be skeptical.
7. Insights

### World Bank Data For Dummies

Developing countries can't always afford to track the data crucial to setting the right economic policies and programs. That's where the World Bank steps in.

### Calculating (Small) Company Credit Risk

Determining creditworthiness of smaller and medium-sized corporations isn't as easy as for larger companies, but these tips can help.
9. Investing

### Optimize your portfolio using normal distribution

Normal or bell curve distribution can be used in portfolio theory to help portfolio managers maximize return and minimize risk.
RELATED FAQS
1. ### What is the difference between standard deviation and variance?

Understand the difference between standard deviation and variance; learn how each is calculated and how these concepts are ... Read Answer >>
2. ### What is price variance in cost accounting?

Understand what price variance is in relation to cost accounting. Learn the most common way price variance arises and how ... Read Answer >>
3. ### What is the difference between variance and covariance?

Learn about the differences between covariance and variance, and how to use them to minimize your stock portfolio's risk ... Read Answer >>
4. ### What is the difference between linear regression and multiple regression?

Learn the difference between linear regression and multiple regression and how multiple regression encompasses not only linear ... Read Answer >>
5. ### 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 >>
6. ### How do you calculate beta in Excel?

Learn how to calculate the beta of an investment using Microsoft Excel. 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 ...