JAYPEE INSTITUTE OF

INFORMATION TECHNOLOGY
Noida, Sector 62
PROBABILITY & RANDOM PROCESSES

NORMAL DISTRIBUTION & ITS

REAL LIFE APPLICATIONS
B.Tech Semester - IV

Submitted By-:
Name Enrollment No.

PRAKHAR MADNANI 22104057 Supervision of:-

DEVANSH KUKREJA 22104060 Dr. SHIKHA PANDEY

(Dept. Mathematics)
VINAYAK GOEL 22104030
KARTIK SHARMA 22104037
PRATEEK GUPTA 22104035
 INDEX
S.No. Particulars Page No.
1. Title of the Project 1
2. Introduction 3
3. Normal Distribution 4-5
4. Properties 6
5. Empirical Rule 7
6. Real Life Examples 8 - 10
8. Conclusion 11
9. References 12
INTRODUCTION
In statistics, a normal distribution or Gaussian distribution is a
type of continuous probability distribution for a real-
valued random variable. The general form of its probability
density function is
Normal distributions are important in statistics and are often
used in the natural and social sciences to represent real-
valued random variables whose distributions are not
known. Their importance is partly due to the central limit
theorem. It states that, under some conditions, the average of
many samples (observations) of a random variable with finite
mean and variance is itself a random variable—whose
distribution converges to a normal distribution as the number of
samples increases. Therefore, physical quantities that are
expected to be the sum of many independent processes, such
as measurement errors, often have distributions that are nearly
normal.
The graph of the normal distribution is characterized by two
parameters: the mean, or average, which is the maximum of the
graph and about which the graph is always symmetric; and
the standard deviation, which determines the amount of
dispersion away from the mean. A small standard deviation
(compared with the mean) produces a steep graph, whereas a
large standard deviation (again compared with the mean)
produces a flat graph.
Normal DISTRIBUTION
Once you have the mean and standard deviation of a normal
distribution, you can fit a normal curve to your data using
a probability density function.
In a probability density function, the area under the curve tells
you probability. The normal distribution is a probability
distribution, so the total area under the curve is always 1 or
100%.
The formula for the normal probability density function looks
fairly complicated. But to use it, you only need to know the
population mean and standard deviation.
For any value of x, you can plug in the mean and standard
deviation into the formula to find the probability density of the
variable taking on that value of x.
Normal Probability Density Formula:
● f(x) = probability
● x = value of the variable
● μ = mean
● σ = standard deviation
● σ2 = variance

What is the Standard Normal Distribution?

The standard normal distribution, also called the z-
distribution, is a special normal distribution where the mean is
0 and the standard deviation is 1.
Every normal distribution is a version of the standard normal
distribution that’s been stretched or squeezed and moved
horizontally right or left.
While individual observations from normal distributions are
referred to as x, they are referred to as z in the z-distribution.
Every normal distribution can be converted to the standard
normal distribution by turning the individual values into z-
scores. Z-scores tell you how many standard deviations away
from the mean each value lies. You only need to know the mean
and standard deviation of your distribution to find the z-score of
a value.
Z-score Formula:
● x = individual value
● μ = mean
● σ = standard deviation

We convert normal distributions into the standard normal

distribution for several reasons:
● To find the probability of observations in a distribution
falling above or below a given value.
● To find the probability that a sample mean significantly
differs from a known population mean.
● To compare scores on different distributions with different
means and standard deviations.
Finding probability using the Z - Distribution
Each z-score is associated with a probability, or p-value, that
tells you the likelihood of values below that z-score occurring.
If you convert an individual value into a z-score, you can then
find the probability of all values up to that value occurring in a
normal distribution.
 Properties
All forms of (normal) distribution share the following
characteristics:
1. It is symmetric:
A normal distribution comes with a perfectly symmetrical
shape. This means that the distribution curve can be divided in
the middle to produce two equal halves. The symmetric shape
occurs when one-half of the observations fall on each side of the
curve.
2. The mean, median, and mode are equal:
The middle point of a normal distribution is the point with the
maximum frequency, which means that it possesses the most
observations of the variable. The midpoint is also the point
where these three measures fall. The measures are usually equal
in a perfectly (normal) distribution.
3. Empirical rule:
In normally distributed data, there is a constant proportion of
distance lying under the curve between the mean and specific
number of standard deviations from the mean. For example,
68.25% of all cases fall within +/- one standard deviation from
the mean. 95% of all cases fall within +/- two standard
deviations from the mean, while 99% of all cases fall within +/-
three standard deviations from the mean.
4. Skewness and kurtosis:
Skewness and kurtosis are coefficients that measure how
different a distribution is from a normal distribution. Skewness
measures the symmetry of a normal distribution while kurtosis
measures the thickness of the tail ends relative to the tails of a
normal distribution.
 EMPIRICAL RULE
The empirical rule, or the 68-95-99.7 rule, tells you where most
of your values lie in a normal distribution:
● Around 68% of values are within 1 standard deviation from
the mean.
● Around 95% of values are within 2 standard deviations
from the mean.
● Around 99.7% of values are within 3 standard deviations
from the mean.
The empirical rule is often used in statistics for forecasting final
outcomes. After calculating the standard deviation and before
collecting exact data, this rule can be used as a rough estimate
of the outcome of the impending data to be collected and
analysed.
This probability distribution can be used as an evaluation
technique since gathering the appropriate data may be time-
consuming or even impossible in some cases. Such
considerations come into play when a firm reviews its quality
control measures or evaluates its risk exposure. For instance, the
frequently used risk tool value-at-risk (VaR) assumes that the
probability of risk events follows a normal distribution.
The empirical rule is also used as a rough way to test a
distribution's "normality."
REAL LIFE EXAMPLES
EXAMPLE 1: Using the probability density function. You
want to know the probability that SAT scores in your sample
exceed 1380.
On the graph of the probability density function, the probability
is the shaded area under the curve that lies to the right of where
your SAT scores equal 1380.
EXAMPLE 2: Technical Stock Market Prediction using
Normal Distribution.

Most of us have heard about the rise and fall in the prices of
shares in the stock market. These changes in the log
values of Forex rates, price indices, and stock prices return
often form a bell-shaped curve. For stock returns, the standard
deviation is often called volatility. If returns are normally
distributed, more than 99 percent of the returns are expected to
fall within the deviations of the mean value. Such characteristics
of the bell-shaped normal distribution allow analysts and
investors to make statistical inferences about the expected return
and risk of stocks.
CONCLUSION
Normal distribution, also known as the Gaussian distribution, is
a probability distribution that is symmetric about the mean,
showing that data near the mean are more frequent in occurrence
than data far from the mean. In graphical form, the normal
distribution appears as a "bell curve".
The normal distribution is one type of symmetrical distribution.
Symmetrical distributions occur when where a dividing line
produces two mirror images. Not all symmetrical distributions
are normal since some data could appear as two humps or a
series of hills in addition to the bell curve that indicates a normal
distribution.
For real life cases, Normal Distribution is very useful.
REFERENCES
● https://www.techtarget.com/whatis/definition/nor
mal-distribution
● https://itl.nist.gov/div898/handbook/eda/section3/
eda3661.htm
● https://www.sciencedirect.com/topics/computer-
science/normal-distribution