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.

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