Value Investing Sensitivity Analysis // Statistics Perspective vs. Finance Perspective |
| Sensitivity Analysis // Statistics Perspective vs. Finance Perspective Posted: 17 Oct 2019 07:53 PM PDT I always believed that in finance sensitivity analysis was, at it's core, about optimization, you generally had a range of two values (like different sale prices and different units sold) and you tried to find what combination of those two values would yield the best result (most profit). In statistical references though, I've concluded that they seem to be referring to something slightly different. They are concerned about which of multiple independent variables seems to have the strongest effect on the dependent variable, holding all things equal. In short, they are more concerned about isolating a variable to test it's importance on the dependent variable, relative to the other independent variables in the model, rather than about how independent variable interaction led to a specific outcome in the dependent variable. Is this correct? Can anyone confirm on the statistics side? Or am I overlooking a concept? [link] [comments]  |
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