Investor Glossary-skewnessInvestor Glossary-skewnessInvestor Glossary-skewnessInvestor Glossary-skewnessInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Skewness

The HTML to link to this page
 

Skewness is a descriptive statistic that is used in analyzing the distribution of a set of data. In finance and investing, skewness is used in conjunction with other metrics, such as kurtosis and value at risk (VAR). When used to analyze investment returns, skewness measures the asymmetry of those returns. A normally distributed dataset would have a skewness of zero. Investment returns, however, do not usually show a normal distribution.

If investment returns are graphed and they show a positive skewness then the following descriptive statistics have the relation: mean > median > mode. When a distribution exhibits a negative skewness the relation is: mean < median < mode.

Skewness is an important consideration when examining investment returns because it can warn of the potential risk involved based on historical returns. Although a negative skewness can be indicative of a high frequency of relatively small gains, it could also warn of the possibility, though a remote one, of a result that is extremely negative.



Rate this Skewness definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: reverse mortgage, current ratio, phantom income, APR, limit order, class C shares, labor relations, diluted share, covered put, dividends payable, debt service coverage, option premium, per diem, irrevocable trust, stock split, inflation, cancelled check, risk management, required rate of return, 1035 exchange, FICO score, 144a, minority interest, Key Rate Duration, average price per share, deferred revenue, liquidity ratio, command economy, annual return, LIBOR, quality assurance, VIX, ex-dividend, ex-dividend date, open position, in escrow, wholly-owned subsidiary, EBITDA, implied volatility, retained earnings, balance sheet, deferred tax, margin rate, 1031 exchange, Zero Cost Collar, FTSE, stock market close, 401a, real GDP


Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
Investor Glossary Index >>> # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
©2004-2014 Investor Glossary - All rights reserved - Terms of Use