Serial Correlation in Data

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Are the future values driven by the past values?

Can we look at past values to predict future values?

need to use the right kind of analysis

Regression Result Intrepretation

Look at X value

It has a positive and statistically signficant relationship with future values

WHEN

The #T-stat is greater than 1.5 and the #P-value is less than 0.1.

This can be confirmed by looking at the coefficient for the X variable. If it is small (say 0.002), then that means a rise of 1 in the target value leads to only a 0.002 rise in the x value.

This tells us there’s correlation, but doesn’t give us the tool to figure out how to predict future values.