Mean Reversion vs. Trend Following
Understand how autocorrelation affects stock price movements and options trading.
Autocorrelation Level:
Strong Mean Reverting (-0.8)
Moderate Mean Reverting (-0.5)
No Autocorrelation (0)
Moderate Trend Following (0.5)
Strong Trend Following (0.8)
Volatility (0-5):
Run Simulation