Cointegration

Cointegration is a way of understanding how two separate things are related to each other. For example, if you have two apple trees in your backyard, their branches will grow in different directions, and the apples on these branches will be different sizes and colors. However, if you measure how much the two trees are growing each month, you will likely find that the two trees are growing in a very similar way.

Cointegration is similar. It takes two different measurements and looks for patterns of how they change over time. If the two things are related, they will move together over time - like the growing apple trees! But if they aren't related, the patterns will look different.