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Trading Terms

Dependence

In the world of finance, we often encounter the concept of an indirect relationship between two variables. This refers to the scenario where the first variable may not have a direct impact on the probability of the second variable occurring, but both are influenced by a common external factor. This can be visualized as a chain reaction, where the initial event sets off a series of events that ultimately lead to the final outcome. Understanding this concept is crucial in analyzing financial data and making informed decisions.
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