Correlated Errors: Why a Monotone Relationship Between Forecast Precision and Trading Profitability May Not Hold

Material TypeArticleLanguageEnglish
TitleCorrelated Errors: Why a Monotone Relationship Between Forecast Precision and Trading Profitability May Not Hold Author(S)Jochen Lawrenz (Author)
Abstract  This paper argues that the relation between financial analysts’ earnings forecast accuracy and their recommendation profitability has to be augmented by the extent of commonality in their forecast errors. We show that while accuracy is positively related to expected performance, the correlation in forecasting errors has a negative impact ...Paginationp675–699
SubjectEconomicsDescriptorsEconomics
Journal TitleJournal of Business Finance & Accounting  
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