What Is an 'Anomaly'?

Anomaly is a term describing the incidence when the actual result under a given set of assumptions is different from the expected result. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

Term of the Day | Words to Know Anomaly In economics and finance, an anomaly is when the actual result under a given set of assumptions is different from the expected result predicted by a model. An anomaly provides evidence that a given assumption or model does not hold up in practice. The model can either be a relatively new or older model. In finance, two common types of anomalies are market anomalies and pricing anomalies. Market anomalies are distortions in returns that contradict the efficient market hypothesis (EMH). Pricing anomalies are when something, for example a stock, is priced differently to how a model predicts it will be priced. Read More » Related to "Anomaly" 7 Market Anomalies Every Investor Should Know Market anomalies are mysterious and often unpredictable. These seven tradeable market anomalies may work in a savvy investor's favor. Read More » What Is Market Efficiency? The Efficient Market Hypothesis (EMH) suggests that stock prices fully reflect all available information in the market. Is this possible? Read More » Best Time(s) of Day, Week, and Month to Trade Stocks When is the best time to buy stocks? What about the best day or month? Here's how time affects trading decisions based on daily, weekly and monthly trends. Read More » SPONSORED BY INVESCO The Complete Guide to ETFs ETFs are becoming increasingly popular and soaring to new heights among investors. Invesco's insights can help you determine if these investment vehicles are right for you. Learn More » Related Definitions Efficient Market Hypothesis The Efficient Market Hypothesis, or EMH, is an investment theory that states share prices reflect all information and consistent alpha generation is impossible. Read More » Capital Asset Pricing Model The Capital Asset Pricing Model is a model that describes the relationship between risk and expected return. Read More » January Effect The January effect is the tendency for stock prices to rise in the first month of the year following a year-end sell-off for tax purposes. Read More » October Effect The October effect is a theory that stocks tend to decline during the month of October. Read More » CONNECT WITH INVESTOPEDIA Email sent to: mondemand.forex@blogger.com To update your newsletter preferences or unsubscribe, click here. 114 West 41st St, floor 8 New York NY 10036 © 2020, Investopedia, LLC, All Rights Reserved | Privacy Policy