A Bell curve is most common type of distribution for a variable and considered as Normal Distribution.
- A bell curve is a graph that is considered to be a normal distribution.
- The top of the curve shows the most likely event out of the data collected.
- After the mean is calculated, standard deviations are figured.
- Standard deviations that depict the returns of a security are known as volatility.
- When making assumptions about a stock’s potential future returns, investors look at the normal probability distribution of its past returns
What Does a Bell Curve Tell You?
The term bell curve is used to describe a graphical depiction of a normal probability distribution, whose underlying standard deviations from the mean create the curved bell shape. A standard deviation is a measurement used to quantify the variability of data dispersion, in a set of given values. The “mean” refers to the average of all data points in the data set or sequence