Confidence Interval
What is Confidence Interval? A confidence interval is an estimate of an interval in statistics that may contain a population parameter. The unknown population parameter is found through a sample parameter calculated from the sampled data. For example, the population mean μ is found using the sample mean x̅. The interval is generally defined by...
Regression Analysis
What is Regression Analysis? Regression analysis is a set of statistical methods used for the estimation of relationships between a dependent variable and one or more independent variables. It can be utilized to assess the strength of the relationship between variables and for modeling the future relationship between them. Regression analysis includes several variations, such...
High Low Method vs. Regression Analysis
High Low Method vs. Regression Analysis The high low method and regression analysis are the two main cost estimation methods used to estimate the amounts of fixed and variable costs. Usually, managers must break mixed costs into their fixed and variable components to predict and plan for the future. Learn more in CFI’s Math for...
Time Series Data Analysis
What is Time Series Data Analysis? Time series data analysis is the analysis of datasets that change over a period of time. Time series datasets record observations of the same variable over various points of time. Financial analysts use time series data such as stock price movements, or a company’s sales over time, to analyze...
Altman’s Z-Score Model
What is Altman’s Z-Score Model? Altman’s Z-Score model is a numerical measurement that is used to predict the chances of a business going bankrupt in the next two years. The model was developed by American finance professor Edward Altman in 1968 as a measure of the financial stability of companies. Altman’s Z-score model is considered...
Pareto Distribution
What is Pareto Distribution? The Pareto Distribution was named after Italian economist and sociologist Vilfredo Pareto. It is sometimes referred to as the Pareto Principle or the 80-20 Rule. The Pareto Distribution is used in describing social, scientific, and geophysical phenomena in society. Pareto created a mathematical formula in the early 20th century that described...
Correlation Matrix
What is a Correlation Matrix? A correlation matrix is simply a table that displays the correlation coefficients for different variables. The matrix depicts the correlation between all the possible pairs of values in a table. It is a powerful tool to summarize a large dataset and to identify and visualize patterns in the given data....
Implied Volatility (IV)
What is Implied Volatility (IV)? Implied volatility (IV) uses the price of an option to calculate what the market is saying about the future volatility of the option’s underlying stock. IV is one of six factors used in options pricing models; however, it can’t be calculated unless the remaining five factors are already known. Ultimately,...
STDEV Function
What is the STDEV Function? The STDEV Function is categorized under Excel Statistical functions. The function will estimate the standard deviation based on a sample. As a financial analyst, STDEV can be useful in using the annual rate of return on an investment to measure its volatility. A risky stock will show a higher standard...
STDEV.S Function
What is the STDEV.S Function? The STDEV.S Function is an Excel Statistical function that will calculate the standard deviation that is based on a sample of the population. It will ignore logical values and text. While doing financial analysis, the STDEV.S function can be useful in, for example, measuring the income standard deviation representative of...
