Serial Correlation

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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".

INVESTOPEDIA EXPLAINS '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.

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RELATED FAQS
  1. What are common examples of Serial Correlation in finance?

    Serial correlation, also known as autocorrelation, describes the relationship between observations on the same variable over ... Read Full Answer >>
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