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TL;DR: Correlations does not imply causation. Having said that, if you can find a negative correlation AND there is a strong reason to believe that the negativ
by huijzer 5y ago
TL;DR: Correlations does not imply causation.
Having said that, if you can find a negative correlation AND there is a strong reason to believe that the negative correlation will hold as long as X and Y hold, then the tool could be very useful.
- HFguy 5y agoYes, agree, correlations don't imply causation. The TLDR is more that correlations throw a lot of information away.
- all2 5y agoHow would one determine what X and Y are?
- macco 5y agoThe idea is that you search for negative correlations and then you look into the two asset, if there is some relationship. For example if the price of oil goes down the stock price of Ford should go up. The correlation is only a first indicator.