“One day, Carmona had an idea. Axcom had been employing various approaches to using their pricing data to trade, including relying on breakout signals. They also used simple linear regressions, a basic forecasting tool relied upon by many investors that analyzes the relationships between two sets of data or variables under the assumption those relationships will remain linear. Plot crude-oil prices on the x-axis and the price of gasoline on the y-axis, place a straight regression line through the points on the graph, extend that line, and you usually can do a pretty good job predicting prices at the pump for a given level of oil price.”