• The Durbin Watson statistic is a test for autocorrelation in the output of a regression model.
  • The DW statistic ranges from zero to four, with a value of 2.0 indicating zero autocorrelation.
  • Values below 2.0 indicate positive autocorrelation and above 2.0 indicate negative autocorrelation.
  • Autocorrelation can be useful in technical analysis, which is most concerned with security price trends using charting methods rather than the financial health of a company or management.