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.

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.

random walk

see EFFICIENT-MARKETS HYPOTHESIS.
References in periodicals archive ?
In this case, the rejection of the null hypothesis would indicate that the market follows a random walk hypothesis, and, consequently, that the market is weak-form efficient.
For Random Waypoint mobility model, and Random Walk model has the smallest throughput value that obtained from the network when has 300 amounts of stations.
Although it is widely accepted that cell migration is complex and multifactorial, our results show that this process can be described with a modification of the random walk model that also considers the application of external forces within a complex biological environment.
Klafter, "The random walk's guide to anomalous diffusion: a fractional dynamics approach," Physics Reports, vol.
Borodin, "Limit theorems for sums of independent random variables defined on a transient random walk," in Investigations in the theory of probability distributions, vol.
Wheater, "Area distribution for directed random walks," Journal of Statistical Physics, vol.
To perform a random walk on a complex network, each node needs to calculate the transition probability from the node to each of its neighbors, but the knowledge available to this endpoint is limited to its local information.
Before the concept similarity is calculated by random walk of a graph, it is needed to establish the initial distribution of the concept map.
By assuming that the covariance matrix presents time-dependent positions and the station monuments are subject to a random walk process, then the formal uncertainty of the estimated velocities is approximated by (Zhang et al., 1997; Williams, 2003; Bos et al., 2008):
The Brownian model performed best at the shortest distances (< 7 cm); the correlated random walk model overtook the Brownian model at 16.5 cm, and overtook the sea star model at 22.5 cm.
A random walk algorithm is used to estimate the candidate confidence.
In addition, the data dissemination cost of the EDFC strategy is higher than the LTCDS strategy, although the length of each random walk is shorter.