Function: Adjusted Win Percentage simply expresses win percentage in conjunction with the given team’s year-to-year deviation.
Formula: (win%+(win%-win%(previous season)))*win%
Same formula can be used to evaluate net rating (replace win% with net rating).
Application: When evaluating team success as the dependent variable, it is vitally important to account for team regression/progression. However, the pure difference is often misleading, as extreme success (see 2015-16 Warriors), or lack thereof (see 2015-16 76’ers), is impossible to sustain. It is therefore crucial to take into account current win percentage to accurately represent the effect that independent variable x has on team success. Thus, rather than use a ternary plot or a three-variable graph of the sort to plot independent variable x, win percentage, and win percentage differential, it is far more convenient and accurate to use Adjusted Winning Percentage.