Matstat Econometrics Matan - page 26
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When the denominator changes, the correlation is positive (for direct quotes).
But when the numerator changes, it is zero or negative.
Same thing, but stronger for currencies....
Coca-Cola shares are quoted in dollars. (x/y)
Huawei shares are quoted in yuan. (z/c)
The yuan exchange rate is determined by the value of a basket of currencies, most of which is the dollar. (c=f(y+s))
(x/y) and (z/(f(y+s)) are functionally related?
strange assumptions. Apocalypse if you take into account, everything alive has its share of interconnectedness.)))
Most everything depends on external global factors. That's understandable. But what is that impact. And what is its share of the rise in asset decline.
Correlation is when Huawei employees consume half of Coca-Cola's products, then there is definitely a correlation. Otherwise, it's just numbers.
strange assumptions. The apocalypse, if you consider the apocalypse, has its share of interconnectedness in all living things.)
Most everything depends on external global factors. That's understandable. But what is that impact. And what is its share of the rise in asset decline.
Correlation is when Huawei employees consume half of Coca-Cola's products, then there is definitely a correlation. Otherwise, it's just numbers.
)
Of course they're numbers.
Finding out the impact is easy. For example, if the Fed suddenly raises the interest rate, then most US companies' share prices go down on the stock exchange. That's because the denominator goes up.
If the denominator (the value of the dollar) goes up, then the stock price of Chinese companies automatically goes down because the yuan rate goes up.
And vice versa.
strange assumptions. The apocalypse, if you consider it, has its share of interconnectedness in all living things.)
Most everything depends on external global factors. That's understandable. But what is that impact. And what is its share of the rise in asset decline.
Correlation is when Huawei employees consume half of Coca-Cola's products, then there is definitely a correlation. Otherwise, it's just numbers.
where coca-cola is comfortable, huawei is uncomfortable :-)
When the denominator changes, the correlation is positive (for direct quotes).
But when the numerator changes, it is zero or negative.
Same thing, but stronger for currencies....
The formulas are correct. Only they don't give an answer. You take into account the relationship between countries and assume that firms are interdependent with each other through this interdependence. Then how do you count the correlation of producers and their suppliers, where there is correlation). And mid-range firms, in different parts of the world, working for the domestic market in the same area of the economy.
You oversimplify.
The formulas are correct. They just don't provide an answer. You consider the relationships between countries and assume that firms are interdependent through these interdependencies. Then how do you count the correlation of producers and their suppliers, where there is correlation.) And mid-range firms, in different parts of the world, working for the domestic market in the same area of the economy.
You oversimplify.
They don't answer because I don't see the question - there is no question in the post. There should be a "?" sign there.
You yourself did not understand what the conversation in this thread was about.
I wrote that all assets are correlated, but there is NO SINGLE correlation.
Correlated because the currencies in which they are quoted are linked. Yes and economies are correlated.
And the level of correlation is not constant and changes over time because there are individual characteristics of markets, sectors, producers and so on and so forth.
And what does understanding this fact give us?
The point is that the same "real-world" data can be interpreted under completely different models and assumptions. There is even such a notion as "a bunch of models". Accordingly, correlation, as an abstract concept, can mean different things depending on the specific model used. That is, there is no clear correlation "data => correlation".
For example, correlation is undefined if the model used is that the data are deterministic - all covariances and variances are zero and a division of zero by zero occurs.
Within econometric models, meaningful use of the concept of correlation occurs in the form of the concepts of ACF and partial ACF.
They don't answer because I can't see the question - it's not in the post. There should be an icon like this "?
You yourself have not understood what the conversation in this thread was about.
I wrote that all assets are correlated, but there is NO SINGLE correlation.
Correlated because the currencies in which they are quoted are linked. Yes and economies are correlated.
And the level of correlation is not constant and changes over time because there are individual characteristics of markets, sectors, producers and so on and so forth.
They don't give an answer about the presence of correlation.
Lan, be like you, everything in the world is interconnected, and my sneeze affects the dollar exchange rate and Biden's mood to some extent)))
No answer as to whether there is a correlation.
Lan, if you say everything in the world is correlated and my sneeze affects the dollar exchange rate and Biden's mood to some extent)))
x/y and z/y have no functional relationship and are uncorrelated?
x/y and z/y have no functional relationship and are uncorrelated?
Of course they are, the question is that they do not give an answer to the existence of a real relationship, it is just an estimate of the relationship. Correlation can be in the form of assets depending on each other and the same behaviour of assets on external factors. Ideally the second part is not a correlation but the same behaviour from external factors. And these are different influences, which should be evaluated separately. They are different things. And if you take by definition a statistical relationship of random variables, then you are right, but what does that estimate provide.
At any moment, assets can start behaving differently because there was no real correlation and the impact of external factors became insignificant.