2/24/2024 0 Comments To regress meaningAnything that can be influenced by an element of chance is subject to this phenomenon. As exceptional performance is difficult to maintain over time, there is a high chance of worse performance in the next quarter, shifting the performance of the company back towards the mean. Suppose that a company has a great quarter, exceeding all targets set. In general, RTM explains why unusual events are likely to be followed by more typical ones. Regression to the mean is observed when variables that are extremely higher or extremely lower than average on the first measurement move closer to the average on the second measurement.
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