This is done by clicking anywhere on the revenue line (in red) on the chart and selecting Chart Tools|Design > Type|Change Chart Type. Since the inventory and revenue time series have a different scale, we need to add a secondary vertical axis. We create the chart on the right side of Figure 1 by highlighting range A3:C21 and selecting Insert > Charts|Insert Line Chart. The analysis of a leading indicator can be carried out using cross-correlation, as explained in the following example.Įxample 1: Evaluate inventory as a leading indicator of a company’s revenues based on the data on the left side of Figure 1. For a company marketing spend may be a leading indicator of revenues with a lag of a few months. There is a lag between a lower CCI and the onset of a recession. When looking for leading indicators, especially when doing financial analysis, instead of evaluating the correlation between two time series, it is often beneficial to investigate the correlation between one time series and the other with a time lag.įor example, the consumer confidence index (CCI) is considered by many economists to be a leading indicator of a gross domestic product (GDP) rise or fall.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |