MRCI's Seasonal Correlation Explanation
 

Moore Research Center, Inc.

  • Increase font size
  • Default font size
  • Decrease font size
Home Help Pages MRCI's Seasonal Correlation Explanation

MRCI's Seasonal Correlation Explanation

E-mail Print
The following is an explanation published in the Moore Research Center Report which explains the use of our correlation charts. Any questions regarding these charts can be directed to Research Director Nick Colley or Editor-in-Chief Jerry Toepke.

The charts published on the Internet illustrate the results of running regression analyses to determine the behavior of which past contracts that of the current contract most closely resembles. This pattern correlation is just that. A comparison of the price pattern in the current contract to patterns exhibited by that contract historically.

The theory underlying this analysis of analogous years, or analogous contracts, is that a market which closely follows the trading pattern of a previous year(s) may continue (to one degree or another) to do so because similar fundamental conditions may exist. Thus, the analysis, which is a refinement of seasonal analysis, becomes a search for results with a predictive quality.

This type of analysis lends itself to various applications. For instance, one can compare previous years in which crops were short or those in which the stock market was lower in February than in January.

For each market past contracts whose trading patterns correlate at a minimum of 80% with the current contract are listed in the title with their respective rates. The chart itself consists of the current market (solid-line) overlaid on the composite (dotted-line) of past years listed. The n-day correlation window is the time segment compared.

Can contracts with similar supply/demand fundamentals exhibit similar price behavior? If so, can that pattern project future direction?

For additional information on our correlation studies, please visit: http://www.mrci.com/web/help-pages/frequently-asked-questions/85-mrci-online/432-correlation-charts.html

Last Updated on Thursday, 22 May 2014 04:42  
Banner

Subscribe Today

Subscribe Today

Subscribe to our FREE Newsletters

Email:

Newsflash

Historically Successful Trading Strategies Are Now Available in MRCI's brand new Energy Report!

Visit our Facebook Page for a free sample strategy!