Reelection Cross Plot

One day you see me
The next day I'm gone
Don't fight me baby
I don't want to hold on
--Madonna

Interesting cross plot of the Intrade Obama odds vs the SPX. You don't need a correlation coefficient to observe the relationship.

However, it appears that the statistical fit would be better by using a curvilinear model rather than the linear model employed here. Although there are fewer data points at the high end of the range, the cross plot suggests that the Intrade Obama reelection odds 'max out' at about SPX 1450.

There are, of course, other factors in play. But the data here suggest that, were a multivariate model employed here, few factors are likely to explain more of the reelection variance than level of the SPX.

The cross plot also suggests that, were the SPX to sell off appreciably, Obama's reelection chances start sliding down a steep slope.

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