Null Hypothesis

A type of hypothesis used in statistics that proposes that no statistical significance exists in a set of given observations. The null hypothesis attempts to show that no variation exists between variables, or that a single variable is no different than zero. It is presumed to be true until statistical evidence nullifies it for an alternative hypothesis.

The null hypothesis assumes that any kind of difference or significance you see in a set of data is due to chance.

For example, Chuck sees that his investment strategy produces higher average returns than simply buying and holding a stock. The null hypothesis claims that there is no difference between the two average returns, and Chuck has to believe this until he proves otherwise. Refuting the null hypothesis would require showing statistical significance, which can be found using a variety of tests. If Chuck conducts one of these tests and proves that the difference between his returns and the buy-and-hold returns is significant, he can then refute the null hypothesis.


Investment dictionary. . 2012.

Look at other dictionaries:

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  • null hypothesis — noun A hypothesis set up to be nullified or refuted in order to support an alternative hypothesis. When used, the null hypothesis is presumed true until statistical evidence in the form of a hypothesis test indicates otherwise. Therefore, the… …   Wiktionary

  • null hypothesis — noun Etymology: null (I) : a statistical hypothesis to be tested and accepted or rejected in favor of an alternative; specifically : the hypothesis that an observed difference (as between the means of two samples) is due to chance alone and not… …   Useful english dictionary

  • null hypothesis — see significance * * * the particular hypothesis under investigation; termed null because it frequently asserts a lack of effect or of difference. Symbol H0. Cf. alternative h …   Medical dictionary

  • null hypothesis — (in the statistical testing of a hypothesis) the hypothesis to be tested. Cf. alternative hypothesis. [1930 35] * * * …   Universalium

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  • null hypothesis — noun (in a statistical test) the hypothesis that any observed differences between two populations are due to sampling or experimental error …   English new terms dictionary

  • null hypothesis — The principle underlying significance tests , which proposes that any differences observed between two samples, or sub sections of one sample, are in fact due to random sampling error rather than to real differences …   Dictionary of sociology

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