Serial Correlation

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".

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.


Investment dictionary. . 2012.

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