Spurious (Deceptive) Nautical Chart Correlations

FT Alphaville's Jamie Powell highlights a flake of deceptive charting from a origin that nosotros were going to postal service on. He chose an illustration dissimilar from the ane nosotros were nigh to percentage so now, y'all lucky duckies, instruct both.

From FT Alphaville:

Creative devastation concerns

The dual axis, similar many charting tools, has its limitations. Used well, it tin propose links betwixt ii information points which may live harder to explicate amongst text.
Take this ane from Moody's, which Colby highlighted in her post on covenant-lite leveraged loans final week:

Yet, inwards the incorrect hands, these charting tools of majority devastation tin live used to prove, well, nearly anything. Take the apparent correlation betwixt Nick Cage films too people drowning inwards swimming pools, for instance:

Another (not quite every 2nd egregious) illustration was spotted yesteryear Alphaville over the weekend on the Twitter work organisation human relationship of macro trader Sven Henrich, who runs the Northman Trader website.
He plotted the percentage cost functioning of stricken United States conglomerate General Electric too its functioning versus the S&P 500, amongst a rather leading comment:

Better promise it's dissimilar this time$GE $SPX pic.twitter.com/IqKJUmG3dq

— Sven Henrich (@NorthmanTrader) November 16, 2018

...MORE

The Northman Trader chart we were looking at was going to live headlined:

Jeez, ya intend the Yom Kippur War, the fossil oil embargo/crisis too the 694-day equity acquit marketplace had anything to produce amongst declining marketplace sentiment?

 

Influenza A virus subtype H5N1 long headline but compared to the simplism  of the nautical chart annotation good worth it for accuracy.
For what it's worth the acquit marketplace lasted from xi Jan 1973 to half dozen Dec 1974.

As noted inwards ane of the links from the postal service forthwith below, "High Yield: Well Would You Look at that (HYG, JNK)":

in her post on covenant-lite leveraged loans final week:

Yet, inwards the incorrect hands, these charting tools of majority devastation tin live used to prove, well, nearly anything. Take the apparent correlation betwixt Nick Cage films too people drowning inwards swimming pools, for instance:

Another (not quite every 2nd egregious) illustration was spotted yesteryear Alphaville over the weekend on the Twitter work organisation human relationship of macro trader Sven Henrich, who runs the Northman Trader website.
He plotted the percentage cost functioning of stricken United States conglomerate General Electric too its functioning versus the S&P 500, amongst a rather leading comment:

Better promise it's dissimilar this time$GE $SPX pic.twitter.com/IqKJUmG3dq

— Sven Henrich (@NorthmanTrader) November 16, 2018

...MORE

The Northman Trader chart we were looking at was going to live headlined:

Jeez, ya intend the Yom Kippur War, the fossil oil embargo/crisis too the 694-day equity acquit marketplace had anything to produce amongst declining marketplace sentiment?

 

Influenza A virus subtype H5N1 long headline but compared to the simplism  of the nautical chart annotation good worth it for accuracy.
For what it's worth the acquit marketplace lasted from xi Jan 1973 to half dozen Dec 1974.

As noted inwards ane of the links from the postal service forthwith below, "Following Up On: "The Coming High Yield Downturn Will Be Big, Long, And Ugly" " (HYG; JNK)

The former timers used to instruct really somber when talking nigh the 1973-1974 equity acquit market.
The thing, they said, was that it simply kept grinding lower too lower, for 694 days.

By comparing the 2007-2009 refuse lasted 517 days, though deeper at a 54% drib inwards the DJIA versus 45% (43% on a closing basis) for the index inwards the before bear.
On the London Exchange the 73-74 collapse was 73% inwards the FT thirty too 68.5% for the wider market.

But so at that topographic point was the inflation. 
British inflation rose 10.6% inwards 1973 too 19.1% inwards 1974. And although lower, the comparable figures for the United States were the same guild of magnitude, 8.7% too 12.3%. 
The inflation adjusted declines were so simply that much worse too amidst the worst existent returns inwards history—excluding of class the Berlin Stock Exchange upwards to 1945 too the FX marketplace for the shekel/denarius cross inwards the twelvemonth 70, what amongst the devastation of Jerusalem too the Temple too all....

Spurious (deceptive) correlation indeed.