## What is 'Unconditional Probability'

An unconditional probability is the independent chance that a single outcome results from a sample of possible outcomes. The term refers to the likelihood that an event will take place independent of whether any other events take place or any other conditions are present. The probability that snow will fall in Jackson, Wyoming on Groundhog Day, without taking into consideration the historical weather patterns and climate data for northwestern Wyoming in early February is an example of an unconditional probability.

Next Up

## BREAKING DOWN 'Unconditional Probability'

The unconditional probability of an event can be determined by adding up the outcomes of the event and dividing by the total number of possible outcomes.

Unconditional probability is also known as marginal probability and measures the chance of an occurrence ignoring any knowledge gained from previous or external events. Since this probability ignores new information, it remains constant.

## Example of Unconditional Probability

For example, let's examine a group of stocks. A stock can either be a winner, which earns a positive income, or a loser, which has a negative income. Out of five stocks, stock A and B are winners, while C, D and E are losers. What is the unconditional probability of choosing a winning stock? Since two outcomes out of a possible five will produce a winner, the unconditional probability is 40% ( 2 / 5 ).

RELATED TERMS
1. ### Empirical Probability

Empirical probability uses the number of occurrences of an outcome ...
2. ### Subjective Probability

Subjective probability is a type of probability derived from ...
3. ### Conditional Probability

Conditional probability is the probability of an event or outcome ...
4. ### A Priori Probability

A priori probability is a likelihood of occurrence that can be ...
5. ### Joint Probability

A joint probability is a statistical measure that calculates ...
6. ### Down Transition Probability

Down transition probability is the probability, in the context ...
Related Articles
1. Investing

### Scenario Analysis Provides Glimpse Of Portfolio Potential

This statistical method estimates how far a stock might fall in a worst-case scenario.
2. Investing

### Financial Forecasting: The Bayesian Method

This method can help refine probability estimates using an intuitive process.
3. Investing

### Multivariate Models: The Monte Carlo Analysis

This decision-making tool integrates the idea that every decision has an impact on overall risk.

### The Math Behind Betting Odds & Gambling

A betting odd opportunity should be considered valuable if the probability assessed for an outcome is higher than the implied probability estimated by the bookmaker. Read more on the math behind ...
5. Investing

### What Are The Odds Of Scoring A Winning Trade?

Just because you're on a winning streak doesn't mean you're a skilled trader. Find out why.
6. Investing

### E*TRADE Expects Next Interest Rate Hike in June

With the first of the Fed's expected rate hikes now behind us, E*TRADE predicts that the next one will come during June's meeting.
7. Tech

### Top Financial Events Impacting Clients in 2016

These events in the financial services industry will have a significant impact on clients.

### Why the Fiduciary Rule is Good for All Investors

The new fiduciary standard should help lower what middle- and lower-income investors pay, on average, to brokers for retirement planning advice.
9. Managing Wealth

RELATED FAQS
1. ### When is it better to use systematic over simple random sampling?

Learn when systematic sampling is better than simple random sampling, such as in the absence of data patterns and when there ... Read Answer >>
2. ### What are the advantages of using a simple random sample to study a larger population?

Learn how simple random sampling works and what advantages it offers over other sampling methods when selecting a research ... Read Answer >>
Hot Definitions
1. ### Diversification

Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
2. ### Intrinsic Value

Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
3. ### Current Assets

Current assets is a balance sheet item that represents the value of all assets that can reasonably expected to be converted ...
4. ### Volatility

Volatility measures how much the price of a security, derivative, or index fluctuates.
5. ### Money Market

The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
6. ### Cost of Debt

Cost of debt is the effective rate that a company pays on its current debt as part of its capital structure.