Serial Correlation


DEFINITION of 'Serial Correlation'

The relationship between a given variable and itself over various time intervals. Serial correlations are often found in repeating patterns when the level of a variable effects its future level. In finance, serial correlation is used by technical analysts to determine how well the past price of a security predicts the future price.

The term can also be referred to as "autocorrelation" or "lagged correlation".

BREAKING DOWN 'Serial Correlation'

Because technical analysis is based entirely on a stock's price movement and the associated volume, rather than the company's fundamentals, finding and validating profitable patterns is an essential component of the success one will have using such methods.

  1. Negative Correlation

    A relationship between two variables in which one variable increases ...
  2. Positive Correlation

    A relationship between two variables in which both variables ...
  3. Correlation

    In the world of finance, a statistical measure of how two securities ...
  4. Cross-Correlation

    A statistical measure timing the movements and proximity of alignment ...
  5. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  6. Pattern

    In technical analysis, the distinctive formation created by the ...
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