Thread Rating:
  • 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5
P/E Ratio Correlation to Payout Ratio
#4
Warning, statistics ahead...

Running a regression in excel's Data Analysis toolpack, I can replicate your regression equation plus output an ANOVA table to get a better idea of this relationship.

Using your exact set up, I get:
R square = 0.1779 (not very predictive)
Significance F = very low (this is good)
p-value for the payout ratio variable = very low (this is good)
p-value of the intercept variable = 0.053 (this fails the 0.05 threshold)

Since the intercept has a high p-value, I reran the regression using no intercept. I actually got better results with the y = 0.54085*x equation.
R square = 0.2559 (not great, but better)
Significance F = very low (this is good)
p-value for the payout ratio variable = very low (this is good)

Wrap up:
Even with the improved equation, the predictive value of the payout ratio isn't that strong. These two ratios are most likely loosely correlated, with no causation. Use with caution.
Reply


Messages In This Thread
P/E Ratio Correlation to Payout Ratio - by 800peace - 05-31-2015, 07:05 PM
RE: P/E Ratio Correlation to Payout Ratio - by benjamen - 06-01-2015, 06:58 AM
RE: P/E Ratio Correlation to Payout Ratio - by 800peace - 06-01-2015, 12:35 PM
RE: P/E Ratio Correlation to Payout Ratio - by benjamen - 06-01-2015, 12:57 PM
RE: P/E Ratio Correlation to Payout Ratio - by 800peace - 06-01-2015, 02:08 PM
RE: P/E Ratio Correlation to Payout Ratio - by 800peace - 06-01-2015, 04:13 PM
RE: P/E Ratio Correlation to Payout Ratio - by 800peace - 06-01-2015, 05:11 PM



Users browsing this thread: 2 Guest(s)