# Simpson's Paradox

*Math & Statistics — Finicade finance glossary*

Simpson's paradox is when a trend that appears in every subgroup reverses when the groups are combined. A fund family can have a manager beating the benchmark in every year and lagging over the full period, if the underperforming years carried far more assets. The resolution is always a lurking variable driving both group membership and outcome, which makes it a vivid argument for disaggregating data before believing it.

**Also known as:** Simpsons paradox, aggregation paradox

**Related terms:** [Correlation vs Causation](https://finicade.com/glossary/correlation-vs-causation), [Omitted Variable Bias](https://finicade.com/glossary/omitted-variable-bias), [Selection Bias](https://finicade.com/glossary/selection-bias), [Mean, Median and Mode](https://finicade.com/glossary/mean-median-mode), [Regression](https://finicade.com/glossary/regression)

Source: https://finicade.com/glossary/simpsons-paradox