Three-Sigma Limits

It's a saying the Phi Beta Deltas have about dating girls from Sigma Delta Pi.

In a financial sense, the term "three-sigma limits" relates to statistics. The sigmas in this case relate to standard deviations of the mean...statistical measures of just how far off of normal something gets.

One standard deviation is kind of weird. Like seeing that guy from work riding the same subway as you, even though you know he lives in the other direction. Two standard deviations off the mean is extra weird. Like noticing that he's been sitting at the coffee shop across from your apartment for a long time.

Three standard deviations is just batty. Now the dude's in your lobby. This can't be a coincidence. Time to lock yourself in the closet and call 911.

The three-sigma limit, therefore, is used as a kind of measure for accuracy in statistics. That far off the mean and the data is in "too weird to be true" territory. The three-sigma limit creates a boundary (both upper and lower) that can be used to review the quality of number-crunching.