Hi all Please anyone explain this qus. I didn't get what does mean-reverting mean? In the solution,it is said that in order to be mean-reverting, this distance must reduce. Why? What does it actually mean that a process is mean-reverting? Please rply asap. Thanks
It reverts to the mean. If the distance didn't reduce then you're saying that the X value is getting further from the mean instead of getting closer (ie reverting) to the mean.
