   
|
|
Skewness
|
| FYI - For 2011, Dow up, Dogs of the Dow up more (double digits) |
| |
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...
|
|
Where is the market headed? The answer may surprise you. Find out
right now with the exclusive & Barron's recommended charts of Chart of the Day.
|
Popular Terms: annual return, inflation, deferred tax, margin rate, open position, command economy, diluted share, current ratio, Key Rate Duration, in escrow, labor relations, option premium, cancelled check, deferred revenue, FICO score, 1035 exchange, stock split, LIBOR, average price per share, class C shares, wholly-owned subsidiary, stock market close, irrevocable trust, liquidity ratio, ex-dividend date, balance sheet, limit order, risk management, ex-dividend, Zero Cost Collar, quality assurance, 1031 exchange, FTSE, covered put, implied volatility, dividends payable, real GDP, APR, debt service coverage, 144a, minority interest, phantom income, 401a, VIX, required rate of return, per diem, EBITDA, reverse mortgage, retained earnings
|
|
| |