A system and method for adaptive and predictive analysis of sensor readings to track documents in a document processing system. The system comprises: a plurality of sensors for sensing a document, wherein each sensor includes an associated filtering system for filtering sensor readings, and a performance tracking system for collecting performance data; and a control system that and adjusts filtering characteristics of the filtering system based on the collected performance data. In addition, a correlation system is provided for using data from at least one upstream sensor to interpret an ambiguous downstream sensor signal.