Insight Things

A scientific blog revealing the hidden links which shape our world

Tag: normal distribution

Chi-squared distribution and normal variance

Those of you who already have tested for the variance of data from a normal distribution may have asked themselves how the link between normal variance and chi-squared distribution arises. Trust me: The story, which I will tell you, is an exciting one! more →

On the distribution of stock return

Having a model to predict the performance of a share would be great, wouldn’t it? In this article I will show that such a model indeed exists. From a statistician’s point of view, the rate of stock return follows a particular probability distribution (which is also one of the preconditions of the Black-Scholes model). Assuming that parameters remain stable over a period of time, we can also give probabilities for some rates of stock return. Got curious? more →

Log-normal distribution mistaken for normal

Quick question: Is BASF’s day-to-day rate of stock returns (shown below) distributed normally?

Day-to-day returns of BASF stock

Day-to-day rates of return of BASF stock

Yes? In theory it isn’t! In theory rates of stock returns follow a lognormal distribution as I have shown in “On the distribution of stock return”. Unfortunately, most people don’t take the lognormal distribution serious, although it is very often at work! This article shows how the lognormal distribution arises and why its shape sometimes mistaken for a normal distribution. more →

Pace the Parking Space

Are you also annoyed when it comes to parking your car? I asked myself, whether marked parking spots are rather hurdles than helpers, and wrote this article 🙂 The goal is to investigate what’s better: Marked or unmarked parking space? more →

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