Statistics for Big Data For Dummies
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In data analysis, the relationship between the mean and the median can be used to determine if a distribution is skewed. The histogram shows that most of the returns are close to the mean, which is 0.000632 (0.0632 percent). The median is −0.0001179.

Histogram shows most returns close to the mean.
Histogram shows most returns close to the mean.

Here's how to determine whether the distribution is skewed:


In this case, the distribution of returns to ExxonMobil stock is positively skewed. This means that large positive returns somewhat outweigh large negative returns in this dataset.

You can also use a histogram to determine if a dataset is skewed. For positively skewed data, the right tail tends to be longer than the left tail. The reverse is true for negative skewed data. In the histogram, the right tail of the distribution appears to be slightly longer than the left tail, which provides more evidence that the data is positively skewed.

About This Article

This article is from the book:

About the book authors:

Alan Anderson, PhD, is a professor of economics and finance at Fordham University and New York University. He's a veteran economist, risk manager, and fixed income analyst.

David Semmelroth is an experienced data analyst, trainer, and statistics instructor who consults on customer databases and database marketing.

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