[Verse 1]
Yesterday's mistakes echo through tomorrow's trades
When residuals whisper secrets from the past
Each error leaves fingerprints on future grades
Serial correlation makes assumptions crash
The ghost of autocorrelation haunts regression dreams
Nothing's truly random when the patterns repeat
Time-series data bursts apart at the seams
When independence crumbles beneath your feet
[Chorus]
DW between zero and four
Two means you're sailing clean shores
Near zero screams positive correlation
Four spells negative fixation
Durbin-Watson guards the gate
Don't let serial errors penetrate
Two-point-zero keeps you straight
Valid inference sealed by fate
[Verse 2]
Adjacent residuals dancing hand in hand
Violate the classical assumption's core
OLS estimates lose their commanding stand
Confidence intervals mean nothing anymore
Standard errors shrink like mirages in heat
T-statistics bloated with false significance
Your model's heartbeat skips its proper beat
When errors cluster in persistent brilliance
[Chorus]
DW between zero and four
Two means you're sailing clean shores
Near zero screams positive correlation
Four spells negative fixation
Durbin-Watson guards the gate
Don't let serial errors penetrate
Two-point-zero keeps you straight
Valid inference sealed by fate
[Bridge]
First-order correlation plagues financial time
Lagged errors poisoning current observations
The test statistic climbs its diagnostic climb
Revealing hidden temporal relations
Inconclusive zones trap unwary souls
Between critical values upper and lower bounds
Until you gather more data for your goals
Or transform variables where correlation drowns
[Chorus]
DW between zero and four
Two means you're sailing clean shores
Near zero screams positive correlation
Four spells negative fixation
Durbin-Watson guards the gate
Don't let serial errors penetrate
Two-point-zero keeps you straight
Valid inference sealed by fate
[Outro]
When time connects what should be separate streams
Remember Durbin-Watson's numeric schemes
Test your residuals before you celebrate
Two-point-zero validates your estimate