Cointegration

Cointegration is a statistical concept used to analyze the relationship between two or more time series data sets. When these data sets are cointegrated, it means that, despite being non-stationary and showing individual trends over time, they move together in a stable relationship in the long run. This implies that any short-term deviations from their common trend will eventually correct themselves. Cointegration is important in fields like finance and economics, helping to identify long-term relationships between variables, such as stock prices or economic indicators, ensuring meaningful predictions and analyses.