Osman added that it is also noticed that the Index is biased to revisit the midrange of the Bollinger Band based on the assumption of "
mean reversion," which assumes that prices tend to move and return back to its average price over time.
I believe that the current
mean reversion trade may not last for long unless of course, the geopolitical tensions in the Middle East shifts its gear or by any miracle, Donald Trump makes peace with China," Aslam said.
The best they could come up with is a strong tendency for growth discontinuities and
mean reversion. At the recent China Development Forum in Beijing, Summers went further in assessing likely outcomes in rapidly growing developing economies, dubbing any mean-reverting slowdown as merely a tendency to close a "post-miracle gap." Needless to say, the statistical regularity of such periodic growth gaps is very different from the permanent quagmire of a growth trap.
Trading at 6.2 times estimated 2019 EBITDA versus a historical trough multiple of 5.9 times and long-term average 8.4 times, shares of Avis look attractive for
mean reversion, Tamberrino tells investors in a research note.
By and large, the continued addition of retail outlets matched with tapering throughput levels highlight
mean reversion in the retail space.
Valuations, fundamentals and
mean reversion -- all are set to favour the UAE this year," Alain Marckus, Managing Director and Head of Investment Strategy and Investment Management for Global Asset Management at FAB said.
This bias is caused by
mean reversion. Because the treatment and comparison groups are drawn from different distributions, any observed overlap in outcomes between the treatment and comparison groups is a result of noise.
Though
mean reversion is not a scientific law, there has never been an occasion when rising asset prices did not eventually return to their long-run average.
Chen and Pottier (2015) examine changes in equity analyst stock price forecasts and find that increases (decreases) in stock price forecasts are preceded by decreases (increases) in stock price forecasts, suggesting
mean reversion in stock price forecasts.
Once this happens,
mean reversion dictates that stocks should again trade at their historical average valuation or P/E, handsomely rewarding anyone patient enough to sit through these tough times.
"Just
mean reversion on getting less worse is enough to make 10 percent or more."
