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


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use