# Statistics

7 posts ## Stepwise Regression: Definition – Explanation – Example

What Is Stepwise Regression? Stepwise regression is a statistical technique for regressing several variables while concurrently deleting those that aren’t significant. The process uses a  step-by-step iterative construction of a regression model.  Independent variables are selected for use in a final model through a series of automated steps. At every […] ## Nonparametric Statistics: Definition – Explanation – Example

What Are Nonparametric Statistics? Nonparametric statistics is a statistical inference method focusing on rankings rather than numbers or underlying distribution assumptions.  With nonparametric statistics, data are not expected to come from specified models determined by a small number of parameters.  Examples of such models include the normal distribution model and […] ## Discrete Probability Distribution: Definition – Explanation – Examples

What Is a Discrete Probability Distribution? A discrete probability distribution describes the occurrence of a discrete random variable with a countable value and a non-zero probability. A discrete probability distribution displays the occurrence of discrete, individually countable events like 1, 2, 3,… or zero vs. one. For instance, the binomial […] ## Autocorrelation in Statistics and Finance: Overview & Examples

What Is Autocorrelation? Autocorrelation is a statistical representation of the degree of correlation between the same variables measured at successive time intervals. Correlation indicates the strength of a linear relationship between two variables.  Whereas, autocorrelation measures the strength of a linear link between time series lagged values. It measures the […] ## Empirical Rule Statistics Definition – Explanation – Example

What Is the Empirical Rule? The Empirical Rule states that virtually all observed data for a normal distribution will fall within three standard deviations of the mean or average. The empirical rule is also known as the three-sigma rule or the 68-95-99.7 rule.  It is a statistical axiom stating that […] ## Mean Reverting – What is Reversion to the Mean?

Mean Reverting – What Is Mean Reversion? Mean reverting, reverting to the mean, or mean reversion are all phrases used to describe a statistical theory that is employed in finance. It implies that asset price volatility and historical returns will ultimately revert to the dataset’s long-run mean or average level. […]