But First, Correlation. To understand regression to the mean, you must first understand correlation, which is the strength of the relationship between two variables.

The other key result is the correlation of the two. Regression statistics will typically include an R-squared value. The closer to 1 this is, the stronger the correlation between the returns of ...

With a correlation that low, there will be some mean regression at work. Think of it this way. Seven door-to-door salesmen go out and sell as many vacuum cleaners as they can on a Sunday.

By the way, the combined correlation between average sales price and volume is -0.73, which is pretty strong. Now, after adding these into our predictive model, we are running our regression analysis.