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Absolute Error: Definition, Formula, Example

By Benjamin Locke – Apr 30, 2025 at 5:04PM | Fact-checked by Frank Bass

Key Points

  • Absolute error measures the exact distance between an estimated value and what is true.
  • Use the formula: Absolute Error = | Estimated value - True value | to calculate it.
  • Through a real-world example, Absolute error helps evaluate forecasting accuracy in investments.
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