DEFINITION of 'Durbin Watson Statistic'
A number that tests for autocorrelation in the residuals from a statistical regression analysis. The DurbinWatson statistic is always between 0 and 4. A value of 2 means that there is no autocorrelation in the sample. Values approaching 0 indicate positive autocorrelation and values toward 4 indicate negative autocorrelation.
INVESTOPEDIA EXPLAINS 'Durbin Watson Statistic'
Autocorrelation can be a significant problem in analyzing historical pricing information if one does not know to look out for it. For instance, since stock prices tend not to change too radically from one day to another, the prices from one day to the next could potentailly be highly correlated, even though there is little useful information in this observation. In order to avoid autocorrelation issues, the easiest solution in finance is to simply convert a series of historical prices into a series of percentageprice changes from day to day.

Simple Random Sample
A subset of a statistical population in which each member of ... 
ZTest
A statistical test used to determine whether two population means ... 
Sampling Distribution
A probability distribution of a statistic obtained through a ... 
Sample Selection Bias
A type of bias caused by choosing nonrandom data for statistical ... 
Statistically Significant
The likelihood that a result or relationship is caused by something ... 
Compound Annual Growth Rate  CAGR
The yearoveryear growth rate of an investment over a specified ...

Home & Auto
Insure Your Future With A Career As An Actuary
If you've got excellent math skills, they can add up to a lucrative career as an actuary. 
Retirement
Consumer Confidence: A Killer Statistic
The consumer confidence is key to any market economy, so investors need to learn the measures and how to analyze them. 
Options & Futures
Arbitrage Squeezes Profit From Market Inefficiency
This influential strategy capitalizes on the relationship between price and liquidity. 
Options & Futures
Trading The Odds With Arbitrage
Profiting from arbitrage is not only for market makers  retail traders can find opportunity in risk arbitrage. 
Mutual Funds & ETFs
5 Ways To Measure Mutual Fund Risk
These statistical measurements highlight how to mitigate risk and increase rewards. 
Trading Strategies
What Your Trading Charts Aren't Telling You
You may be missing some key statistics when following charts in the market. 
Economics
Where do funds report their rsquared?
Learn where to find Rsquared calculations for mutual funds. Explore Rsquared, Alpha and Beta and how these calculations measure securities' performance. 
Fundamental Analysis
How do you calculate rsquared in Excel?
Calculate Rsquared in Microsoft Excel by creating two data ranges to correlate. Use the Correlate formula to correlate both sets of data, or x and y. 
Fundamental Analysis
What are the most common issues with Serial Correlation in stocks?
Read about the concept of serial correlation in stock returns, and learn why market analysts are divided about the efficacy of trading based on stock patterns. 
Trading Strategies
How far back in a stock's history should you go when gauging its volatility?
Discover why it can be difficult for investors to figure out how far back to go into a stock's history when gauging its volatility.