Mean reversion – FACT: Prices will fluctuate from a mean (price) to different Highs and Lows and will always revert to a mean (price) at some stage in the future. Below is a list of popular definitions for Mean Reversion, including their sources:
- A theory suggesting that prices and returns eventually move back towards the mean or average - Investopedia.
- The essence of the concept is the assumption that both a stock’s high and low prices are temporary and that a stock’s price will tend to move to the average price over time
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