Skewness


Skewness
Describe asymmetry from the normal distribution in a set of statistical data. Skewness can come in the form of "negative skewness" or "positive skewness", depending on whether data points are skewed to the left (negative skew) or to the right (positive skew) of the data average.

Skewness is extremely important to finance and investing. Most sets of data, including stock prices and asset returns, have either positive or negative skew rather than following the balanced normal distribution (which has a skewness of zero). By knowing which way data is skewed, one can better estimate whether a given (or future) data point will be more or less than the mean.

Most advanced economic analysis models study data for skewness and incorporate this into their calculations. Skewness risk is the risk that a model assumes a normal distribution of data when in fact data is skewed to the left or right of the mean.


Investment dictionary. . 2012.

Look at other dictionaries:

  • skewness — 1894, from SKEW (Cf. skew) + NESS (Cf. ness) …   Etymology dictionary

  • skewness — [skyo͞o′nis] n. 1. the fact or condition of being skew, or, esp., unsymmetrical 2. Statistics the lack of symmetry of the curve for a frequency distribution …   English World dictionary

  • Skewness — Example of experimental data with non zero (positive) skewness (gravitropic response of wheat coleoptiles, 1,790) In probability theory and statistics, skewness is a measure of the asymmetry of the probability distribution of a real valued random …   Wikipedia

  • skewness — skew, skewness Term used to describe an asymmetrical probability distribution. American Banker Glossary Negative skewness means there is a substantial probability of a big negative return. Positive skewness means that there is a greater than… …   Financial and business terms

  • Skewness — Asymétrie (statistique) En théorie des probabilités et statistiques, le coefficient de dissymétrie (skewness) est un moment standardisé qui mesure l asymétrie de la densité de probabilité d une variable aléatoire définie sur les nombre réels. En… …   Wikipédia en Français

  • skewness — skew ► ADJECTIVE ▪ neither parallel nor at right angles to a specified or implied line; askew. ► NOUN 1) an oblique angle; a slant. 2) a bias towards one particular group or subject. ► VERB 1) suddenly change direction or move at an angle. 2)… …   English terms dictionary

  • skewness — noun Date: 1894 lack of straightness or symmetry ; distortion; especially lack of symmetry in a frequency distribution …   New Collegiate Dictionary

  • skewness — /skyooh nis/, n. Statistics. 1. asymmetry in a frequency distribution. 2. a measure of such asymmetry. [1890 95; SKEW + NESS] * * * …   Universalium

  • skewness — noun a) The property of being skew. b) A measure of the asymmetry of the probability distribution of a real valued random variable; is the third standardized moment, defined as where is the third moment about the mean and is the standard… …   Wiktionary

  • skewness — skew·ness (skuґnis) of a probability distribution, lack of symmetry about the mean, or any measure of the lack of symmetry …   Medical dictionary


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