Some Interesting Weather Observations
I believe weather and the financial markets have much in common. Both are giant reversion to mean systems. And obviously, weather has much to do with growing shellfish. The crossover has increased my fascination with the topic and led me to collect a but a sliver of the potentially available temperature data out there produced by NOAA. Below are four charts of temperature data as recorded by the National Weather Service for T.F. Green airport in Providence, Rhode Island. The first one is the 10-day cumulative temperature departure from normal with normal depicted as a zero line. The second one shows the daily average departure against the normal high-low range for the year. The second does a better job of showing how well we tend to stay within the bands... even though the behavior of the actual deviation with the band is erratic, and the predictability nil. The tendency of the deviation to stay within the bands is (within a certain acceptable standard deviation) is constant. So for the same data set we have a combination of that which is totally unpredictable along with that which is completely predictable. Chart three shows the 10 and 30-day departure from normal with zero line and chart four is a longer term 365 and 90-day departure. The 365 has already reverted to mean. You don't want to think about what a visit to the negative end of the range would mean for our weather over the next 5 years.
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