2. Problem Statement
These methods have shortcomings and lack the in depth explanation or causality of the complex Intermarket relationships. Moreover, these methods like neural networks and manual or automated technical analysis assume a fixed relationship and do not accommodate well to the ever changing dynamics in the global economy and the change in the relationships (divergence/decoupling) between these four markets. Many factors influence the change in the relationships between these markets, among them Geo-political factors.
In “Intermarket Analysis and Investing: Integrating Economic, Fundamental, and Technical Trends” (Gayed and Gayed, 1990) explain each perspective and well advised to integrate the three and into Intermarket analysis. …show more content…
These factors are economic factors, fundamental factors, social –human subjective factors, and technical factors. The Technical factors study is mainly the study of the price movements for each market and lack the theoretical aspect of the Intermarket relationships, thus the application of such methods can be practicable but very dangerous. Technical analysis recognizes patterns, formations, levels, or areas that appear on charts that can be interpreted in terms of probable future moves and developments; moreover, they have proved to be superior to any statistical methods used for similar analysis (Edwards, Magee and Bassetti, …show more content…
Measuring the Lead and Lag between the markets and the causality or dependency between them. In addition, building dynamic models that take in consideration that Intermarket relationships are constantly changing. One model may have high R Squared in one time period, but insignificant one in another time period. Finding the factors that impact the dynamic relationship is an important part of this study. Economic Cycles, Business Cycles, Geo-political factors, inflation, and other factors make studying Intermarket Analysis a challenging but worthwhile
These methods have shortcomings and lack the in depth explanation or causality of the complex Intermarket relationships. Moreover, these methods like neural networks and manual or automated technical analysis assume a fixed relationship and do not accommodate well to the ever changing dynamics in the global economy and the change in the relationships (divergence/decoupling) between these four markets. Many factors influence the change in the relationships between these markets, among them Geo-political factors.
In “Intermarket Analysis and Investing: Integrating Economic, Fundamental, and Technical Trends” (Gayed and Gayed, 1990) explain each perspective and well advised to integrate the three and into Intermarket analysis. …show more content…
These factors are economic factors, fundamental factors, social –human subjective factors, and technical factors. The Technical factors study is mainly the study of the price movements for each market and lack the theoretical aspect of the Intermarket relationships, thus the application of such methods can be practicable but very dangerous. Technical analysis recognizes patterns, formations, levels, or areas that appear on charts that can be interpreted in terms of probable future moves and developments; moreover, they have proved to be superior to any statistical methods used for similar analysis (Edwards, Magee and Bassetti, …show more content…
Measuring the Lead and Lag between the markets and the causality or dependency between them. In addition, building dynamic models that take in consideration that Intermarket relationships are constantly changing. One model may have high R Squared in one time period, but insignificant one in another time period. Finding the factors that impact the dynamic relationship is an important part of this study. Economic Cycles, Business Cycles, Geo-political factors, inflation, and other factors make studying Intermarket Analysis a challenging but worthwhile