Hi, as I am going through reading 13, I am quite confused by these 2 things. I know that they are different, but it seems like sometimes the CFAI book just uses them interchangeably. For example, using unit root test to test whether a series is covariance stationary. Just because a series does not have a unit root, we cannot conclude that it is covariance stationary, or is that wrong? Thanks for any clarification.

yes, if it has a unit root, it is NOT covariance startionary. And that is BAD

I know that, but if it does have a unit root, does it mean it is covariance stationary? I am kind of confused with the hypothesis on this. H0: g1 = 0, Ha: g1 < 0 What happens to g1 > 0, I thought any hypothesis has to cover all cases.

Dickey Fuller test …