# Mean-Reverting Random Walks

Mean-Reverting Random Walks

Many financial or economic processes can be modeled as mean-reverting random walks. Mean-reverting walks differ from simple diffusion by the addition of a central expectation, usually growing with time, and a restoring force that pulls subsequent values toward that expectation. The random term is lognormally distributed, and the initial value of the mean can be above or below the series start. The strength of the restoring force is given in terms of the time to return to the mean. The plot shows sample paths which result in the , , , , and percentiles in endpoint value, out of a larger sample.

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