# >> Continuing Education >> Be Self Taught

How to Use Anova for Price Analysis

Analysis of Variance, often referred to as ANOVA, is one of the most powerful statistical tools for determining whether two or more groups have equal averages. While investment analysts and bankers typically shy away from using ANOVA as a predictive tool, it can provide valuable comparative information about stocks. Running an ANOVA test on key performance metrics over the past 52 weeks can show whether all the stocks provide the same bang for the buck or if one stock far outperformed the others.

Instructions

- 1
  Determine which stocks you wish to compare. Locate the key metrics, such as earnings per share (EPS) or price to earnings ratio, from a financial news source for each stock.
- 2
  Enter the information into a statistical analysis program such as IBM's SPSS. Label each column, such as stock price or 52-week high and low, for future reference.
- 3
  Select "ANOVA test" from the "Statistical Analysis" menu on your analytics program. Select the performance indicators that you wish to compare.
- 4
  Read the report for whether it indicates a statistically significant difference between the stocks' averages. Record the name of the stock and variable tested if the report indicates that its average was significantly higher than the other stocks.

How to Give Strings Functions in AS3

How to Calculate Approach Speed

Be Self Taught