I have two time-series of 2 different products x & y. They belong to the same main category, e.g.: Iphone 6 and Iphone 5. Maybe one product is the predecessor of the other product.
I tested for correlation between the sales of the 2 products and got r=.67. Correlation is calculated on the number of sales of the 2 products for the same month. Does this mean that there is a causal relationsship between the sales of the two products?
Are both sales pattern the same? In this case I might be able to forecast one time series with the historical data of the other one.
Best Answer
You informed us that these are two extremely different products. If there is no theoretical reason at all for sales to be correlated and you still find a strong correlation, it is likely that there is a spurious relationship. I would like to remind you that this is a bivariate analysis, and the interpretation of the relationship between sales would remain limited unless you extend it to multivariate framework (by including other predictors, controls etc.).
After edit:
I think the argument still holds. Without accounting for other factors (with additional assumptions), looking only to correlation between sale numbers (for a month) to make predictions about future would be misleading. Maybe reading more on forecasting will be a better strategy, this website might be helpful.