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zak
zak
9 years ago

Rich,
The correlation

Rich,

The correlation between inverse months of inventory and price changes has been pretty correlated over the past few years (it seems), but since Jan of 2013, the correlation seems to have more variance ( visually the gap between the lines seems wider). Do you have any theories on what is happening there?

feraina
feraina
9 years ago
Reply to  Rich Toscano

Looks to me like it’s not
Looks to me like it’s not that the correlation has decreased between the two, but that it has changed somewhat in nature. It looks like the two axes are mis-aligned for recent data: If 0 on the price change axis was aligned to 5 or even 4 months on the inverse months of inventory axis, and the latter was also expanded (zoomed in) a bit, such that a smaller change in inverse months of inventory corresponded to the same change in the price change, then the correlation would visually look a lot better.
For whatever reasons, maybe the new critical inventory size is now 4-5 months instead of 6?