Permutation
What is a Permutation? A permutation is a mathematical technique that determines the number of possible arrangements in a set when the order of the arrangements matters. Common mathematical problems involve choosing only several items from a set of items in a certain order. Permutations are frequently confused with another mathematical technique called combinations. However,...
Combination
What is a Combination? A combination is a mathematical technique that determines the number of possible arrangements in a collection of items where the order of the selection does not matter. In combinations, you can select the items in any order. Combinations can be confused with permutations. However, in permutations, the order of the selected...
Total Probability Rule
What is the Total Probability Rule? The Total Probability Rule (also known as the Law of Total Probability) is a fundamental rule in statistics relating to conditional and marginal probabilities. The rule states that if the probability of an event is unknown, it can be calculated using the known probabilities of several distinct events. Consider...
Weighted Mean
What is the Weighted Mean? The weighted mean is a type of mean that is calculated by multiplying the weight (or probability) associated with a particular event or outcome by its associated quantitative outcome and then summing all the products together. It is very useful when calculating a theoretically expected outcome where each outcome has...
Data-Mining Bias
What is Data-Mining Bias? Data-mining bias refers to an assumption of importance a trader assigns to an occurrence in the market that actually was a result of chance or unforeseen events. The data-mining bias, for many analysts, is considered an “insidious threat” because it can sneak up on traders and analysts alike during the research...
Data Mining
What is a Data Mining? Data mining is the process of uncovering patterns and finding anomalies and relationships in large datasets that can be used to make predictions about future trends. The main purpose of data mining is to extract valuable information from available data. Data mining is considered an interdisciplinary field that joins the...
Financial Mathematics
What is Financial Mathematics? Financial mathematics describes the application of mathematics and mathematical modeling to solve financial problems. it is sometimes referred to as quantitative finance, financial engineering, and computational finance. The discipline combines tools from statistics, probability, and stochastic processes and combines it with economic theory. Mathematics and Statistics Explained Mathematics is the discipline...
Harmonic Mean
What is Harmonic Mean? Harmonic mean is a type of average that is calculated by dividing the number of values in a data series by the sum of the reciprocals (1/x_i) of each value in the data series. A harmonic mean is one of the three Pythagorean means (the other two are arithmetic mean and...
Expected Value
What is Expected Value? Expected value (also known as EV, expectation, average, or mean value) is a long-run average value of random variables. It also indicates the probability-weighted average of all possible values. Expected value is a commonly used financial concept. In finance, it indicates the anticipated value of an investment in the future. By determining...
Central Tendency
What is Central Tendency? Central tendency is a descriptive summary of a dataset through a single value that reflects the center of the data distribution. Along with the variability (dispersion) of a dataset, central tendency is a branch of descriptive statistics. The central tendency is one of the most quintessential concepts in statistics. Although it...
