Dominion Resources (D) is a company associated with production and transportations of energy in the United States. The model for D is stable during the past ten months. It is a deterministic one and has been defined by the consumer price index of pets, pet products and services (PETS) and transportation services (TS). The former CPI component does not lead the share price and the latter one leads by 4 months. Figure 1 depicts both involved indices. Relevant coefficients are both negative. Therefore the growth in both indices causes the share price to fall. The slope of time trend is positive. The best-fit 2-C model for CI(t) is as follows:
CI(t) = -2.55*PETS(t) – 2.01*TS(t-4) + 29.29(t-2000) + 343.52
where t is calendar time.
The predicted curve in Figure 2 repeats the measured one. The residual error is $3.26 for the period between June 2003 and December 2010. The model provides an excellent and very stable prediction of the share price.
Figure 1. Evolution of the price of PETS and TS.
Figure 2. Observed and predicted CI share prices.