Spurious correlation

Understanding spurious correlation:

http://tylervigen.com/spurious-correlations

Interesting and funny, thanks for your post :grin:

Harrogath,

Thank you. For sure we should take the length of the series that could be very short to be significant. It also shows the need for using a confidence interval to appreciate the likelihood of such occurrence.

Confidence intervals do not allow one to make probabilistic statements about a hypothesis or the true parameter value. The only probabilistic statement one can make is about the long-run performance of the methodology. For example, a 95% confidence interval for true mean stock return is 3% to 9%, however, this does not mean there is a 95% chance (or likelihood) that the true mean return is between 3% and 9%.