random walk

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Random walk

Theory that stock price changes from day to day are accidental or haphazard; changes are independent of each other and have the same probability distribution. For a simple random walk, the best forecast of tomorrow's price is today's price. Related: Mean reversion.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Random Walk Theory

An investment philosophy holding that security prices are completely unpredictable, especially in the short term. Random walk theory states that both fundamental analysis and technical analysis are wastes of time, as securities behave randomly. Thus, the theory holds that it is impossible to outperform the market by choosing the "correct" securities; it is only possible to outperform the market by taking on additional risk. Critics of random walk theory contend that empirical evidence shows that security prices do indeed follow particular trends that can be predicted with a fair degree of accuracy. The theory originated in 1973 with the book, A Random Walk Down Wall Street. See also: Efficient markets theory.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

random walk

see EFFICIENT-MARKETS HYPOTHESIS.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
References in periodicals archive ?
Before implementing any of the selected tests, the existence of correlations between market returns was studied, as they offer early insights into the markets that do not follow a random walk. When a market is identified as being weak-form efficient, stock prices follow a random walk, indicating that price changes are independent and not related to each other, and that historical information is fully and instantaneously reflected in current prices.
Although he did not exploit all richness of his model, Langevin obtained in the long-time regime Einstein's result, namely, by <[x.sup.2]> = 2([k.sub.B]T/6[pi]a[mu])t, where a is the radius of particle, [mu] is fluid viscosity, T is temperature, and [k.sub.B] is the Boltzmann's constant, hence bridging Brownian motion, random walk, and diffusion, a view soon quantified experimentally by Perrin [18].
Scher, "Application of continuous time random walk theory to tracer test measurements in fractured and heterogeneous porous media," Groundwater, vol.
Wendler, "Empirical processes for recurrent and transient random walks in random scenery," https://arxiv.org/abs/1711.10202.
This modified model gives rise to a random walk behavior of the electrostatic field that can be analyzed as a Markovian stochastic process.
For this object, we take advantage of random walks on weighted networks and thus can make use of reversible Markov chains theory.
We compared the movements of Aquilonastra anomala sea stars to three random walk models (Brownian motion, Levy walks, and correlated random walks) by examining the sea stars' step length and turn angle distributions.
Semantic relations among words uses two separate random walk algorithm to estimate candidate confidence.
Random walk [23] was used in EDFC strategy to disseminate source packets among the entire network.
Keywords: random walk, market efficiency, information, capital markets.
The aim of this paper is to point out observations that the results of a random walk on G, combined with the results on open book decompositions and closed braids, lead to various interesting and non-trivial properties on random open books and closed braids.
WOESS, Random walks on infinite graphs and groups, Cambridge Tracts in Mathematics (2000).