A Sigma Event is an event that is expected to occur with a certain probability based on the standard deviation of a dataset. The term “sigma” refers to the Greek letter σ, which is used to represent the standard deviation in statistical analysis.
In a normal distribution, the probability of an event occurring can be determined based on the number of standard deviations that the event falls from the mean (average) value. For example, a one sigma event is an event that is expected to occur with a probability of about 68%, a two sigma event is expected to occur with a probability of about 95%, and a three sigma event is expected to occur with a probability of about 99.7%.
The term “sigma event” is often used in the context of statistical quality control or risk analysis, where it can be used to indicate the likelihood of a particular occurrence or problem occurring. For example, in a manufacturing process, a three sigma event might be a defect or deviation from the expected quality level that is considered to be relatively rare and not a major concern.
It’s important to note that the term “sigma event” is used somewhat informally, and the specific definition may vary depending on the context in which it is used.