According to , the model for DeVry (DV) is defined by the index for the rent of primary residency (RPR-CUUS0000SEHA) and that of pets, pet products and services (PETS-CUUR0000SERB). The former CPI component leads the share price by 11 months and the latter one leads by 4 months. Figure 1 depicts the overall evolution of both involved indices. From our past experience, the larger is the lag the more unreliable is the model. However, both defining components provide the best fit model between August 2009 and June 2010. The positive influence of RPR (+7.90) is compensated by the negative input of all other terms . So, the best-fit 2-C model for DV(t) is as follows:
DV(t) =7 .90RPR(t-11) – 2.76PETS(t-4) - 35.73(t-2000) - 757.63
The predicted curve in Figure 2 leads the observed price by 4 months with the residual error of $3.24 for the period between July 2003 and June
The model does predict the share price in the past and foresees A significant fall in the next quarter, i.e. through September 2010. It will be in line with the overall fall in the S&P 500 in 2010.
Figure 1. Evolution of the price of RPR and PETS.
Figure 2. Observed and predicted DV share prices . Original predcition is shown by red line. Black diamonds present the original prediction shifted by 4 months ahead.