Hi, I am trying to find the auto correlation of current earnings change and past earnings change, but I have no idea how to compute that using the lagged and current variable. An example of my sample and what I am trying to achieve is:
Year Earnings Lagged earnings (-1 year) Earnings change Past earnings change
1963 200 250 50 0
1964 300 200 100 50
1965 400 300 100 100
1966 425 400 25 100
1967 475 425 50 25
1968 410 475 65 50
1969 400 410 10 65
1970 500 400 100 10
1971 530 500 30 100
So first, you have to compute earnings change and the past earnings change and then calculate the overal correlation between them. Thank you in advance!