£/m2 driver

Sensitivites are determined by price

  • It was visible via the colours on the scatterplot that price is closely related to the angle describing the sensitivities

  • Angle then is defined as ‘angle counterclockwise from the horizontal axis’, which will be recognised by STEM students as the usual convention, and they will recognise this as a ‘change of coordinates: cartesian to cylindrical’ as studied at A level

  • In this chart we we see that this angle it is very closely related to log(£/m2)

  • To recap:

    • the factors and sensitivities are derived purely from monthly performance indices

    • when we apply factor analysis they show something resembling wave motion

    • the ‘phase angle’ which describes where an area lies on the wave is very closely related to price - a totally independent metric

    • we have quantified the ripple effect

  • This strong relationship between factors based on fundamentals (floor area) and statistics (principal components analysis) is rare and remarkable